Soft landing: people are claiming victory too early

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by InternationalTop2405

A lot of people are claiming victory too early. There is a lot of hype in the markets, and the consensus is now a soft landing. It looks like a massive “return to normal” stage.

January 2001 (3 months before the start of the recession)

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August 2007 (4 months before the start recession)

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Soft Landing Ahead for U.S. Economy

July 2023

Everyone’s starting to feel the “soft landing”

Monetary policy always comes with a lag, taking about 18 months for the impact of a single rate increase to fully seep through into spending patterns and prices. – Financial Times

We didn’t even fully feel the impact of the first rate hike of March 2022. 18 months will correspond to October 2023.

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Assuming this FOMC meeting will be the last rate hike, the impact of the entire hiking cycle will be fully felt in January 2025.

Also, many leading indicators already start to indicate that a recession is more and more likely: yield curve, jobless claims, rising delinquencies, cyclical GDP in negative territory, US Leading Economic Indicators, etc.