Fed Aims for 'Soft Landing' to Curb Inflation Without Sparking Recession
• A "soft landing" would mean the economy slows enough to reduce inflation without entering a recession. The Fed hopes to engineer this by raising interest rates.
• In a soft landing scenario, job growth would weaken but unemployment would likely only rise to about 4%. In a recession, millions of jobs would be lost.
• Inflation should gradually fall to 2% in a soft landing. In a recession it would likely fall faster due to lower demand.
• Interest rates would still be higher than pre-pandemic in a soft landing, but the Fed would cut rates in a recession.
• Corporate profits rose recently but could deteriorate in a recession, while a soft landing could maintain profit growth.