The U.S. Economy is Feeling Better About a Soft Landing

The term may have been on the back burner recently, but economists have not stopped talking about their hopes for the U.S. to get a “soft landing” after the economic turmoil of prolonged high inflation.

November’s solid jobs report did nothing to damage the prospects of the soft landing. With an unemployment rate of 3.7% and another 199,000 jobs created, the signs are good. Analysts agree that the jobs market is doing its part to improve the economy’s prospects.

The latest Labor Department’s nonfarm payrolls report showed that besides the extra 190,000 jobs created, average hourly earnings rose 4% from a year ago, exactly in line with expectations.

Still, the solid report couldn’t dispense the lingering feeling that the economy isn’t out of the woods yet. The fear primarily comes from worries that the Federal Reserve’s aggressive interest rate increases haven’t delivered their full effect and still could trigger a downturn.

The consumer will be key to whether the so-called landing is soft or hard, which collectively accounts for nearly 70% of all U.S. economic activity.

On that front, there was another round of good news Friday. The University of Michigan’s closely watched consumer sentiment survey showed that inflation expectations, a key economic variable for prices, plummeted in December. Respondents put one-year inflation expectations at 3.1%, a stunning 1.4 percentage point drop.

There was one other good piece of inflation news on Friday. Rental costs nationally declined 0.57% in November and were down 2.1% yearly, the latter being the biggest slide in more than 3½ years.