{"id":11993,"date":"2022-10-10T17:23:23","date_gmt":"2022-10-10T17:23:23","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=11993"},"modified":"2022-10-10T17:23:23","modified_gmt":"2022-10-10T17:23:23","slug":"are-we-headed-for-an-economic-soft-landing","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/are-we-headed-for-an-economic-soft-landing\/","title":{"rendered":"Are We Headed for an Economic &#8220;Soft Landing&#8221;?"},"content":{"rendered":"\n<p><em>Duane R. from St. Louis, MO asks: <\/em>Hey Mitch, I\u2019ve been seeing some reports about the possibility of an \u201ceconomic soft landing,\u201d which seems like a pretty optimistic view of the current situation. Where is your thinking on this? Thank you.<\/p>\n\n\n\n<p><strong>Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n<p>Thanks for your question. Many economists are weighing in on this topic with widely varying opinions, ranging from economic catastrophe to no recession at all. I tend to lean towards the latter category, in thinking the economy will weather this period better than most expect.<\/p>\n\n\n\n<p>To be clear, I\u2019m not convinced the U.S. will avoid recession altogether. Leading economic indicators like the Conference Board\u2019s LEI Index and the 10-year\/3-month U.S. Treasury bond yield curve are pointing to weaker growth ahead. What has puzzled many economists, though, is the ongoing strength in the labor market. Job growth is still posting numbers above pre-pandemic levels, and a remarkable 30% of unemployed people find a new job each month. The situation can always change, but in my view, you can\u2019t commit to the \u2018economic catastrophe\u2019 narrative when jobs are this plentiful.<sup>1<\/sup><\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_10_06_2022&amp;content=recession_is_coming\">How to Prepare for a Recession<\/a><\/u><\/strong><\/p>\n\n\n\n<p>What will happen to your investments if a recession occurs? A recession can impact investors in many different ways, but with foresight and planning, you may be able to avoid some of the damage a recession can cause.<\/p>\n\n\n\n<p>To help you plan for what\u2019s ahead, we are offering our recession guide, to help you understand the following \u2013<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Recession signals and indicators<strong><em><\/em><\/strong><\/li><li>How recessions work<strong><em><\/em><\/strong><\/li><li>How long recessions last<strong><em><\/em><\/strong><\/li><li>How to potentially protect yourself and your family from long-term damage<strong><em><\/em><\/strong><\/li><\/ul>\n\n\n\n<p><strong><u><br><\/u><\/strong>If you have $500,000 or more to invest, get our free guide. You\u2019ll learn the scope and impact of recessions, and get our viewpoint on the most important moves you can make to weather a potential one. Don\u2019t wait\u2014get this guide today!<br>\u00a0<br><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_10_06_2022&amp;content=recession_is_coming\">Download Your Copy Today:\u00a0<em>A Recession is Coming: 6 Insights to Know You\u2019re Prepared<\/em><\/a><\/u><\/strong><em><strong><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_10_06_2022&amp;content=recession_is_coming\"><u><sup>2<\/sup><\/u><\/a><\/strong><\/em><\/p>\n\n\n\n<p>____________________________________________________________________________<\/p>\n\n\n\n<p>The Fed\u2019s projections for where rates will end up next year \u2013 which are again by no means set in stone \u2013 are also what I would consider to be fairly modest in historical terms and relative to current inflation. If the Fed expects the fed-funds benchmark rate to reach 4.6%, and core inflation by the Fed\u2019s preferred gauge is currently 4.5%, then we end up with real (nominal rates adjusted for inflation) interest rates of 0%. Generally speaking, if the Fed wanted to quash demand and slow growth considerably, we would see real rates move firmly into positive territory.<\/p>\n\n\n\n<p>The Federal Reserve still expects that other cyclical forces will help bring inflation down in addition to their rate hikes, like more labor-force participation and an easing of the issues impacting food and energy markets. A key part of any thesis that we will see a \u201csoft landing\u201d relies on these other factors bringing inflation down, which in turn would lower the risk that the Fed over-tightens and would increase the chances that the labor market holds up. There are many \u201cifs\u201d in all of these scenarios, but I remain in the camp that the U.S. economy and consumers are more dynamic and resilient than currently appreciated.<\/p>\n\n\n\n<p>There are other economic fundamentals that run counter to the economic catastrophe scenario, in my view. The Commerce Department reported last week that consumer spending rose 0.4% month-over-month in August, which was notably higher than the inflation prints over the same time frame. We\u2019re also seeing relatively strong activity in industrial production and capital expenditures, which we would normally expect to be faltering in a weaker economy.<\/p>\n\n\n\n<p>There is no way to know exactly when or if a recession will occur, but you can prepare for one.<\/p>\n\n\n\n<p>It\u2019s important to understand how recessions work, how long they last, and how to potentially protect yourself and your family from long-term damage to your assets and security. We can help you with our free guide, <em><strong><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_10_06_2022&amp;content=recession_is_coming\">A Recession is Coming: 6 Insights to Know Now So You\u2019re Prepared<\/a><\/strong><\/em>.<sup>3<\/sup><\/p>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide today. You\u2019ll learn the scope and impact of recessions, and get our viewpoint on the most important moves you can make to weather this one. Don\u2019t wait\u2014get this guide today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mitch looks at the varying opinions about the economy ahead\u2014from total catastrophe to no real recession at all. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-11993","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11993","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=11993"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11993\/revisions"}],"predecessor-version":[{"id":11995,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11993\/revisions\/11995"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=11993"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=11993"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=11993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}