At the beginning of 2023, consensus economic and market opinion generally scoffed at the notion of the U.S. Federal Reserve achieving an economic soft landing: a scenario that results in a slowdown in consumer demand and labor market conditions sufficient to bring inflation closer to the Fed’s long-term 2% target without the economy falling into deep recession.

Despite the benchmark Fed Funds rate hiked to 5.50% at the July FOMC and warnings from Fed officials that policy tightening may persist longer than what is expected by the markets, economic consensus has (grudgingly) accepted soft landing as the base case outcome and that the Fed has achieved its policy goals with no need for further rate hikes.

By Benjamin M. Lavine, CFA, CAIA, RICP
Chief Investment Strategist, Freedom Advisors & Chief Investment Officer, 3D, a Freedom Advisors company