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Soft Landing Comes Back Into View Despite Bank Drama
In the latest weekly+, I suggested that, for the first time this cycle, the incoming macro data uniformly points to a decelerating US economy.
I don't say that lightly, nor is it lost on me that in virtually any other context, a nonfarm payrolls report featuring a 236,000 headline print, a 3.5% unemployment rate and 4.2% YoY wage growth would count as a very robust read on the labor market.
And yet, between the ISM misses, the ADP shortfall (versus consensus) and particularly the downside JOL
… lots of spinning economic plates to juggle and balance…as well as both international destabilization, and domestic sabotage efforts to undermine current situation … a Wallenda esque challenge if you will…
I’ll admit to be very skeptical of this view by Goldman, I could entertain the idea of a soft landing a couple of months ago, but with credit contraction now a reality and in light of recent moves in the bond market, expecting a soft landing is a bit like believing in santa clause as an adult, we’ll see.
Consistent with your skeptical view is that temporary help appears to have inflected to the downside.
https://fred.stlouisfed.org/series/TEMPHELPS#0
What do people understand “soft landing” to mean?
Is it simply no NBER-designated recession of any degree? Or something more specific?
One version I’ve heard/read is (along with low inflation) no gdp shrinkage and only a moderate increase in unemployment, or possibly a 3 month recession (however NBER wants to invent that).
https://www.npr.org/2022/07/24/1112770581/inflation-recession-soft-landing-rates-jobs-fed
The thing is, stagflation is bad enough that a brief “hard landing” would still be preferred.