The U.S. economy has defied the doomsayers once again. More than a year has passed since a recession was seen as a foregone conclusion and a “soft landing” pronounced near impossible. But today, the soft landing is well advanced, even if not complete: The Fed has found success in lowering inflation without triggering a recession. The labor market, the only reliable evidence that the economy is in recession, has cooled without pushing up the unemployment rate.
What Happens After the U.S. Economy’s Soft Landing?
The U.S. appears to have skirted a recession, but leaders should expect a new disequilibrium to emerge.
July 21, 2023
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Summary.
A year ago, a recession was seen as a foregone conclusion — and yet the Fed appears to have successfully lowered inflation without triggering a recession. Many of the negative forecasts followed a pattern of underestimating the U.S. economy’s resilience, typically because they were based on historical models and precedent, not situational and idiosyncratic context. While the soft landing may be progressing with promise, it won’t be an end state — a new disequilibrium will emerge. Leaders can’t wait for macroeconomic certainty or stability. Instead, they must recognize that the macroeconomy will remain untamed by models — and that what matters is judgment.