After a year of navigating stormy geopolitical developments that kept businesses and consumers on edge, the U.S. economy is starting to look like it it could have a smooth descent to a soft landing.
A soft landing is the term used by economists for getting inflation down to the Federal Reserve’s 2% annual target without putting the economy in a recession.
That hasn’t happened since World War II. It took a famously gut-wrenching recession to wring out the last bout of high inflation from the economy in the late 1970s and early 1980s.
Economists note that there have been false hopes that were dashed before. Former Federal Reserve officials argued that the economy was on a track for a soft landing in late 2024, before President Trump was sworn into office and immediately announced swift government job cuts and plans for high tariffs on imported goods that U.S. manufacturers and businesses relied on.
“After this week’s employment and inflation data, it is starting to look like the elusive soft landing may finally happen,” said Harvard University economist Jason Furman, in a post on X.
The U.S. economy added 130,000 jobs in January and the unemployment rate dropped to 4.3%, a sign
the fragile labor market is stabilizing.