A Soft Landing Won’t Mean the Economy Is Safe
Even a “Goldilocks” Fed will have to deal with the three bears of inflation, disease and politics.
Since we gave up on the idea that high inflation would be transitory, the hope has been that we would manage a soft landing: Inflation would melt back to 2% without doing too much harm to the labor market or economic growth. That’s what the Federal Reserve has predicted for months, even as economists warned it was extremely unlikely. Now it seems a soft landing is a real possibility. Inflation is falling and the labor market remains strong with unemployment at a 50-year low and wage growth of 4.6%.
Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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