The president of the Federal Reserve Bank of Chicago warned that it is still “too early to declare victory” on the U.S. achieving an economic “soft landing.”
President and CEO of the Federal Reserve Bank of Chicago Austan Goolsbee cautioned on CBS’s “Face the Nation” that there are still numerous “concerning data points” that may affect a so-called soft landing.
“It’s too early to declare victory. We made a lot of progress. So the thing to remember is every time in the past that the Fed or other central banks around the world have had to get inflation down a lot,” he said. “It has — basically always been accompanied by a major recession in 2023.”
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“We still get one more month of data, but 2023 looks like it’s going to end up being a very substantial reduction in inflation without a big increase in the unemployment rate, that’s the golden path that I talked about, but we’re still above the target,” he continued. “We gotta get inflation down to target before it … until we are convinced that we’re on path to that … it’s an overstatement to, to be counting the chickens.”
Wall Street rallied last week after the Federal Reserve signaled that it would begin cutting interest rates next year. A handful of analysts predicted that there would be an economic “soft landing” from high inflation without a recession.
The Congressional Budget Office also forecasted last week that annual inflation will slow down toward the Federal Reserve’s 2 percent target in 2024. Goolsbee warned that “concerning data points” on increasing homelessness, high rent prices and the end of pandemic-era assistance could affect the economic outlook.
“You see delinquencies going up on for both credit card debt, auto lending and small business lending,” he added. “We — we’ve got to take the economy in a totality. We have a straightforward mandate, like I say, which is maximize employment and stabilize prices. We just gotta keep taking readings of the economy as we go along.”