Whatever the Fed suggests about the macro outlook at the March FOMC meeting, the US economy’s headed for a soft landing. The restoration of price stability won’t require a recession. That’s the consensus narrative at this juncture.

Personally, I don’t have a strong opinion either way. Not if I’m honest. I pretend to care on most days, but as long-time readers will attest, I don’t. Care, I mean. If I walked out my front door tomorrow morning and the city streets were on fire, I’d wave at a rioter, duck a Molotov, W.-style, then go back inside and fix some coffee.

But I suppose a benign outcome to the most vexing macro environment in a generation’s preferable to an adverse scenario, and in that context, I’d welcome news that the smartest folks on Wall Street still expect a favorable resolution. If I put any stock in such forecasts. Which I don’t. And not because I don’t respect and appreciate the effort. It’s just that forecasting macro outcomes is futile, even for the smartest among us.

If you do put any stock in such things, the figure below’s notable. The red line is the average of several key labor market pressure indicators.

“Broad measures of labor market slack… have continued to ease in recent months, so that a composite measure of labor market pressure has returned to where it stood in February 2020,” Goldman’s Jan Hatzius said.

That’s a good thing: You still want a little more slack. Not job losses, obviously. Just slack. Because the US labor market’s still a bit of a pressure cooker, and that’s inflationary.

Plus, if Goldman’s correct about the underlying cause of the rise in the unemployment rate from cycle lows, then “more” joblessness isn’t foreboding. “A key reason for the smooth labor market rebalancing despite strong GDP growth and rapid payroll gains has been the immigration surge,” Hatzius wrote, recapping work by Ronnie Walker discussed at length here earlier this week.

The higher unemployment rate “has mainly occurred among (recent) immigrants and probably largely reflects lags between their labor market entry and job-finding,” Hatzius went on, adding that “such a supply-driven increase in unemployment is a fundamentally more benign development than a demand-driven increase that involves laying off existing workers, although it should still help bring aggregate wage growth down to more sustainable levels.”

Speaking of wage growth, that too has moderated and according to forward-looking measures, should be consistent with 2% price growth soon enough.

“Both our wage survey tracker and the Indeed wage tracker — which is based on posted wages in job ads — are already consistent with a slowdown to 3.5%, our estimate of sustainable wage growth at 2% inflation and 1.5% productivity growth,” Hatzius wrote, in the same note.

What about OER and shelter inflation more generally? There too, Goldman expects a benign resolution. The bank cited weakness in “alternative measures of asking rents” in expressing “strong conviction that rent and OER inflation will trend down further.”

So, labor market normalization, wage growth moderation and an expected decline in rent inflation, all set against Goldman’s now higher GDP forecast for the US. (2.7% for the full year.) That’s about as “Goldilocks” as it gets.

What if they’re wrong? What if the US labor market suffers a so-called “Wile E. Coyote” moment, for example? Well, there’s always rate cuts for that. As Hatzius put it, “History shows that it would only take a small rise in the unemployment rate to generate more aggressive cuts, especially from levels that are almost universally viewed as restrictive.” That’s the policy asymmetry discussed in these pages recently.

(As a quick aside: “Universally” may be a stretch when it comes to describing opinions about the level of restriction implied by current policy settings. A lot of economists believe the neutral rate’s high enough now that rates aren’t unduly restrictive.)

Goldman’s GDP outlook may count among the Street’s rosier forecasts, but the bank’s hardly alone in expecting a good outcome. In a global macro outlook published this week, SocGen’s Stephen Gallagher reiterated the rationale for removing the bank’s US recession call. “Companies are enjoying strong profits and cash flows [and] there is little or no pressure to cut employment,” he said.

SocGen’s forecasts are shown above, including projections for Fed funds and post-QT SOMA.

Although Gallagher expressed some concern around rising delinquencies on credit card balances, he said Americans will probably keep borrowing anyway. That, at least, seems like a safe call.

“A weakening balance sheet may induce a deeper downturn when it comes, but there is no visibility of a [recession] anytime soon,” Gallagher added.