{"id":61181,"date":"2023-09-15T01:34:50","date_gmt":"2023-09-15T05:34:50","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/a-predicted-soft-economic-landing-may-have-an-undertow\/"},"modified":"2023-09-15T01:34:53","modified_gmt":"2023-09-15T05:34:53","slug":"a-predicted-soft-economic-landing-may-have-an-undertow","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=61181","title":{"rendered":"A Predicted Soft Economic Landing May Have An Undertow"},"content":{"rendered":"<div>\n<p>The number of big names in economics cheering on an economic soft landing \u2014 a return to a 2% inflation rate without a recession intercession or high unemployment \u2014 has been noteworthy.<\/p>\n<ul>\n<li>Treasury Secretary Janet Yellen told Bloomberg in an interview on the way back from the G-20 economic summit in New Delhi that she was \u201cfeeling very good about that prediction\u201d of a soft landing.<\/li>\n<li>Nobel winner Paul Krugman wrote in the New York Times<fbs-ticker data-name=\"NYT\" data-href=\"https:\/\/www.forbes.com\/companies\/new-york-times\" data-type=\"stock\"><br \/>\n   NYT<br \/>\n  <\/fbs-ticker> in July that \u201cwe may be heading for a soft landing\u201d with consumer prices \u201cbetter than even optimists had expected\u201d and dismissing \u201csome fairly peevish reactions from economists who had committed themselves to the grim view that we would face a nasty \u2018sacrifice ratio\u2019 \u2014 that controlling inflation would require years of high unemployment.\u201d<\/li>\n<li>Not quite as enthusiastically, Larry Summers told Bloomberg Television a couple of weeks ago that the economy is still strong and that a cooling labor market signaled a further approach to a soft landing.<\/li>\n<li>Top economists of the American Bankers Association said in a survey expected that real gross domestic product (GDP) \u2014 meaning taking inflation into account \u2014 would drop to 1.2% in 2024 with an unemployment rate edging up to 4.1%.<\/li>\n<\/ul>\n<p>Growing positivity (if looking toward more people being out of work is positive), but much of this sounds like people seems like people selling a vision. And that is certainly part of it. There are political pressures and the common need for experts to seem like they are prescient.<\/p>\n<p>But this is an uncertain time, and it is dangerous to assume that everything has to work out. It doesn\u2019t and there are signs of disturbance.<\/p>\n<p>To understand the biggest issues, note that consumer spending generally represents 68% of GDP. Enough of a drop and consumers can bring the economy down quickly, sparking a recession.<\/p>\n<p>The Federal Reserve Bank of New York runs its monthly Survey of Consumer Expectations. In the July edition, the median expectation of consumers was that household income would increase by 3.2%, but that household spending would grow by 5.4%. Now, in the latest August version, household income growth expectations were now 2.9% and spending would increase by 5.3%. That meant in July a cap between income and spending of 2.2%, with spending leading the way. For August, the gap was up to 2.4%. Consumers see themselves increasingly falling behind after years of inflation and the realities of most of the employment sector.<\/p>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>The Conference Board Consumer Confidence Index declined in August to 106.1, falling from July\u2019s downwardly revised 114.0. And the Expectations Index \u2014 \u201cbased on consumers\u2019 short-term outlook for income, business, and labor market conditions\u201d \u2014declined to 80.2 after a July rebound to 88.0. \u201cAugust\u2019s disappointing headline number reflected dips in both the current conditions and expectations indexes,\u201d said Dana Peterson, chief economist at The Conference Board.<\/p>\n<p>Bloomberg\u2019s Markets Live Pulse Survey recently concluded that consumers were \u201cabout to hit a wall.\u201d Out of the 526 respondents, more than half said personal consumption will drop early in 2024, and 21% said things will decline sooner.<\/p>\n<p>Details of the Consumer Price Index, according to the U.S. Bureau of Labor Statistics (BLS), showed that the CPI was up 0.6% in August compared to 0.2% in July. Now, gas prices were a big part of this \u2014 half, according to the BLS \u2014 but without that, it was still higher in August than the previous month. Shelter rose for the 40th consecutive month, with apartment rents putting the squeeze on consumers. Core inflation, which takes out food and energy as more volatile items that can distract from a better trend understanding, was 4.3% over the previous 12 months. Slowing? Yes. Close to what the Fed expects? No. As experts have pointed out, many of the gains to date have been the easy ones. Squeezing out the remaining price expansion takes work.<\/p>\n<p>The screws are tightening on the one segment most responsible for how the economy grows, even though consumers haven\u2019t been the main drivers of inflation. For that, look to other factors, like corporate profits.<\/p>\n[corporate profits graph]\n<p>But it\u2019s easier, maybe more palatable, for the Fed and other major economic forces to point to consumers.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/eriksherman\/2023\/09\/15\/a-predicted-soft-economic-landing-may-have-an-undertow\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The number of big names in economics cheering on an economic soft landing \u2014 a return to a 2% inflation rate without a recession intercession or high unemployment \u2014 has been noteworthy. Treasury Secretary Janet Yellen told Bloomberg in an interview on the way back from the G-20 economic summit in New Delhi that she [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":61182,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-61181","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A Predicted Soft Economic Landing May Have An Undertow | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The number of big names in economics cheering on an economic soft landing \u2014 a return to a 2% inflation rate without a recession intercession or high\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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