Fed's "Soft Landing" Strategy Seems to be Working

[bjl584]

The Fed's soft landing is 'firmly in place': BMO CIO (yahoo.com)

[disneysteve]

Yep. The US economy is in the best shape it has been in for decades. The Fed managed to pull off the extremely rare task of taming inflation but avoiding a recession. Let’s just hope current conditions continue for at least 4 more years. Stay the course and we’ll be in fantastic shape.

[Jluke]

I’m hoping to experience the situation where the 2nd 1 million comes a lot faster than the 1st million.

40% of the way there

[disneysteve]

I’m hoping to experience the situation where the 2nd 1 million comes a lot faster than the 1st million.

40% of the way there

The 1st million always takes the longest. They get progressively faster after that thanks to the wonders of compounding.

[srblanco7]

Yep. The US economy is in the best shape it has been in for decades. The Fed managed to pull off the extremely rare task of taming inflation but avoiding a recession. Let’s just hope current conditions continue for at least 4 more years. Stay the course and we’ll be in fantastic shape.

From what I've read - taking inflation from over 9% to under 3% without causing a recession has happened only one other time in the past 60 years. So credit to the Fed for engineering a "soft landing".

That being said, the three main pain points of current inflation continue to be housing/rent costs, auto insurance, and child care costs. For many, these are unavoidable spend items and so it's continuing to hit many middle class households. I just paid our annual house & car insurance bill and it's up 15% year over year. Ouch.

[ua_guy]

From my point of view, things are looking just fine. The fed appears to have used enough braking force to cause fear of recession, but not an actual recession. I think that's described as, "stuck the landing".

[disneysteve]

A big question to me is how do we reconcile reality and consumer sentiment when they are wildly divergent? I just saw the results of a CNBC poll where 78% of respondents rated the economy Fair or Poor. We have an abundance of proof that the economy is doing remarkably well and yet more than 3/4 of folks seem to think otherwise. Record low unemployment, strong housing market, record high stock prices, inflation back under 3%, strong GDP growth, interest rates poised to start dropping, etc. What more do the "Fair or Poor" crowd need to see to understand how well we are doing? Or does the problem all stem from media and politicians telling their followers that things are bad, even though they really aren't, in order to attract votes? It's maddening to me. In my reselling groups, there are always people blaming their slow sales on "the economy". At the same time, I'm hitting record sales numbers with my business. Their problem is not the economy, but they'd rather blame that than their own shortcomings as sellers.

[Jluke]

Maybe it’s the fact that salaries aren’t moving in the same direction at the same pace?

and the usual, those that are not invested don’t get to share in the fun.

[kork13]

Average Joe doesn't understand or know about or really care about what is truly "the economy". All of the technical numbers, analysis, and trend data are lost on most people.

To average folks, "the economy" is a term that refers to their own pocketbook, how affordable things feel to them, how afraid they are (or are not) about losing (or finding) their jobs, how much faith they have in things getting better for them.
BL #1: Their "economy" is about feelings, not numbers.

Inflation has been tamed, but the effects of it still run rampant. The cost of goods/services/major life events have dramatically increased ... But paychecks grow at a much slower pace than those costs have. I think this dynamic is the biggest factor in the negative perception. That perception is further inflamed by politicians and politicized media outlets (on all sides) who use half-truths/selective evidence, fear, bombast, divisiveness, accusation, and hate to feed emotional responses to curry political support.
BL #2: We're all doing this to ourselves.

[disneysteve]

Average Joe doesn't understand or know about or really care about what is truly "the economy". All of the technical numbers, analysis, and trend data are lost on most people.

To average folks, "the economy" is a term that refers to their own pocketbook, how affordable things feel to them, how afraid they are (or are not) about losing (or finding) their jobs, how much faith they have in things getting better for them.
BL #1: Their "economy" is about feelings, not numbers.

Exactly. I did also hear today that the latest consumer confidence survey showed improvement so at least the message is getting through to some.

The media definitely blows things out of proportion. A week ago, it was all "a recession is coming" and the market tanked. This week, it's "nope, no recession is coming" and the market had the best week of the year so far.

Even if most people's day to day lives haven't changed much, they become convinced it has changed because of what they hear over and over on the news or read online. Much of that either simply isn't true or is greatly sensationalized to garner clicks and views.

[ua_guy]

A big question to me is how do we reconcile reality and consumer sentiment when they are wildly divergent? I just saw the results of a CNBC poll where 78% of respondents rated the economy Fair or Poor. We have an abundance of proof that the economy is doing remarkably well and yet more than 3/4 of folks seem to think otherwise. Record low unemployment, strong housing market, record high stock prices, inflation back under 3%, strong GDP growth, interest rates poised to start dropping, etc. What more do the "Fair or Poor" crowd need to see to understand how well we are doing? Or does the problem all stem from media and politicians telling their followers that things are bad, even though they really aren't, in order to attract votes? It's maddening to me. In my reselling groups, there are always people blaming their slow sales on "the economy". At the same time, I'm hitting record sales numbers with my business. Their problem is not the economy, but they'd rather blame that than their own shortcomings as sellers.

There is no reconciling it. Things have to feel cheap again. And the cost of borrowing needs to be cheap. Most people rely on borrowing other people's money for big purchases (cars, houses, big furniture, home appliances, vacations). When people spend most or all of their paycheck anyway, and a bigger portion of it goes to servicing debt, they'll follow anyone who sides with them and promises to lessen their burden.

[Fishindude77]

This group is not "the average person" in America. Majority here are above average earners, financially responsible, we save, we invest, we pay off our debts quickly, etc., and we are the minority.

The average American lives pretty close to paycheck to paycheck, carries more debt than they should, doesn't invest much if any for retirement, puts vacations and silly expenditures on their credit card, etc. Things are still pretty tough for this crowd, compared to several years ago; gas is higher, groceries are higher, mortgage rates are higher, rent is high, child care is high, pretty much all of their general living expenses have increased substantially. They probably got some wage bumps over this time period, but not equal to the increased prices of the aforementioned items. Bottom line is, their money is not going as far as it used to. If you can't see this, you're not paying attention.

We all have substantially increased living expenses also. Just fill up your tank, go out to eat or buy groceries and you'll see it. It just doesn't sting nearly as bad when you are on good financial footing.


Side tracking a bit. I don't know how many here follow anything regarding the Agricultural economy, but it's a big part of the overall American economy. Due to good weather, we're going to have great harvests this year, but commodity prices are in the toilet while input costs; fuel, fertilizer, seed, feed, land rents, borrowing rates, etc. remain high. Could be a tough year for farmers and ranchers.

[disneysteve]

The average American lives pretty close to paycheck to paycheck, carries more debt than they should, doesn't invest much if any for retirement, puts vacations and silly expenditures on their credit card, etc. Things are still pretty tough for this crowd,.

I understand and appreciate all of that and think you're absolutely right.

I guess what annoys me is when I talk about "the economy" I'm referring to the national economy while when the average person mentions "the economy" that's not at all what they're talking about. It makes for a very disjointed conversation and highly skewed poll results. For 78% to say the national economy is fair or poor is ludicrous because it's blatantly not true, but that's not actually what they have in mind when they respond to that poll question. Any poll results are worthless if the terms being asked about aren't clearly defined so that everyone weighing in knows exactly what it is they're being asked about.

[Fishindude77]

Problem is, what you are calling a "good economy" doesn't affect a great many (78%) of Americans. What you call untrue is very true for them.
If you want to change their opinions, the price of everyday things like gas and groceries needs to come down or at least stabilize for an extended period till incomes catch up.

Don't tell a farmer the economy is good when all of his land, input and equipment costs have skyrocketed and he's still getting 2020 prices for his grain.
Don't tell someone wanting to build or buy a new home the economy is good, when building materials have doubled in the last 4-5 years and mortgages have gone from 3% to 6.5%.
There are countless examples like this where inflation is eating people up.

[disneysteve]

Problem is, what you are calling a "good economy" doesn't affect a great many (78%) of Americans. What you call untrue is very true for them.
If you want to change their opinions, the price of everyday things like gas and groceries needs to come down or at least stabilize for an extended period till incomes catch up.

Don't tell a farmer the economy is good when all of his land, input and equipment costs have skyrocketed and he's still getting 2020 prices for his grain.
Don't tell someone wanting to build or buy a new home the economy is good, when building materials have doubled in the last 4-5 years and mortgages have gone from 3% to 6.5%.
There are countless examples like this where inflation is eating people up.

Definitely. That's really the point. If you ask 10 people about the state of the economy you're going to get 10 different answers because they're not all defining "the economy" in the same way. Almost daily there are posts in my ebay group from people saying their sales are bad because of "the economy". My sales are fantastic, better than ever. Aren't we both living and working in the same economy? The difference is how we each define "the economy". To them, the economy must be bad because their sales are down, which doesn't really have anything at all to do with the actual state of the economy but that's their perception and perception is reality.