Mon. Feb 26th, 2024
US Unlikely to Experience Soft Landing

According to Apollo Management’s chief economist, Torsten Sløk, a soft landing for the US economy is currently unlikely. He has stated that this outcome has a less than 50% chance of occurring due to the precarious balance between easing financial conditions and the lingering effects of the Fed’s interest rate hikes.

Previously a proponent of a soft landing, Sløk’s opinion has shifted as new economic data continues to emerge. One factor behind this change is the improved financial conditions in the economy. Companies are issuing more high-yield and investment-grade bonds, the IPO market is reviving, and mergers and acquisitions are increasing. These improvements have also contributed to a stronger job market, with January’s jobs report adding 353,000 jobs to the economy. However, on the other hand, the lagged effects of the Fed’s rate hikes are slowing down consumers, firms, and bank lending. Resulting in high interest rates and making borrowing money more expensive.

This new data leaves the economy in a fragile equilibrium between these opposing forces

By Editor

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