US Fed governor says ‘possible’ soft landing will not occur
The US economy is not out of the woods yet and could still see a rise in unemployment, a Federal Reserve governor wrote in a co-authored paper published Friday.
But despite recent progress, there is still reason to be cautious about the world’s largest economy, Fed Governor Christopher Waller wrote in a paper co-authored with Andrew Figura, a senior economist at the bank.
“The labor market is not fully back to where it was prior to the pandemic, and inflation remains significantly” above the Fed’s long-term inflation target of two percent, they wrote.
“As a result, it is possible that a soft landing will not occur,” they added, referring to a scenario where inflation eases to target with only a “noticeably smaller increase in unemployment than has occurred in previous recessions.”
But despite this warning, Waller and Figura said most forecasters still expected a soft landing, with only a “modest” rise in the unemployment rate.
“Clearly, they also believe that a soft landing in the labor market is possible,” they added.
