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By Staff Reporters
FINANCIAL JARGON
The notion of a “no landing” scenario for the U.S. economy — as opposed to a hard or soft landing — is the latest topic to dominate discussions among economists and strategists.
DEFINITION?
According to Michael B. Kelley Editorial Director of Yahoo Finance, says that a “no landing” scenario involves the economy continuing to grow despite the Federal Reserve’s best efforts to tamp down inflation with interest rate hikes. And, what does that does it mean? “It’s all about inflation,” Bianco Research President Jim Bianco told Yahoo Finance Live.
“What they want or what they’re hoping for, both at the Fed and on the Street, is that the inflation rate is going to hit 2%,” he explained. “Well, the only way that it’s going to do that — at least the belief is — the economy has to slow. And if it doesn’t slow, then the inflation rate stays up. And if the inflation rate stays up, the Fed keeps hiking.”
CITE: https://www.r2library.com/Resource/Title/0826102549
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LINK: https://flo.uri.sh/visualisation/6180194/embed?auto=1
Given the implication the Fed will continue raising rates until inflation subsides — and, in turn, the economy cools off — some observers argue that there’s no such thing as a “no landing” scenario.
“Because we’re in this highly volatile environment, and because there is so much uncertainty, we’ve now seen a number of different ways to interpret or call what we’re seeing in the economy,” EY Parthenon Chief Economist Gregory Daco told Yahoo Finance this week.
“No landing does not make any sense, because it essentially means the economy continues to expand, and it’s part of an ongoing business cycle and it’s not an event — it’s just ongoing growth,” Daco added. “Doesn’t that entail that the Fed will have to raise rates more, and doesn’t that increase the risk of a hard landing?”
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Filed under: "Ask-an-Advisor", Experts Invited, Glossary Terms, Investing | Tagged: Bianco Research, EY Parthenon, financial jargon, FOMC, Gregory Daco, Jim Bianco, Michael B. Kelley, No Landing Economy |
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