US economy shows resilience, but is soft landing a strong possibility?
Jerome Powell appears cautious as he acknowledges that such an outcome is merely a possibility which will depend on numerous factors beyond the control of the US Fed. Powell indicated that a "soft landing" for the economy is not the most likely or expected outcome, but it is still considered a possibility.
"I've always thought that the soft landing was a plausible outcome... ultimately, this may be decided by factors that are outside our control at the end of the day, but I do think it's possible," Reuters quoted Powell saying during a press conference last week.
"The autoworker strike, a possible government shutdown, the resumption of student loan repayments, higher energy prices, and higher long-term borrowing costs are among risks that Powell noted could affect the trajectory of the economy, inflation and, ultimately, where Fed policymakers decide they need to take rates," the Reuters report said. The US Fed maintained a pause on interest rate hikes in its latest policy meeting but indicated at least one more hike by the end of the year was on the cards.
The US economy has been able to avoid a recession this year and a majority of experts still believe that the economy will achieve a soft landing but some of the experts warn this expectation could be misleading. For example, Pacific Investment Management Company LLC (PIMCO) believes that the market may be ignoring the risk of at least one more rate hike from the US Fed before the year-end and a looming US recession.
"Markets may be underestimating the risks of both a US recession and one more interest-rate hike from the Federal Reserve, making haven assets a preferred play," Bloomberg reported, quoting PIMCO saying so. When the Fed started raising rates aggressively
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