No landing for the economy?
Economists and investors have been divided about a recession or no recession in the US and a subsequent hard landing or soft-landing scenario for the economy. However, a third opinion has started to emerge of late and that is that the economy will not be landing at all but taking off again.
With the unemployment rates at record lows, many have a hard time seeing a recession coming this year. Now with certain economic data points like consumption and wages holding steady, and several housing indicators showing a reacceleration, there is a case to be made that the US economy is indeed taking off again.
Now this scenario is not fraught with problems. The risk being that it could mean an increase in inflation or simply an anchoring of higher inflation rates. In turn, it would mean the US Federal Reserve could raise rates higher which would hurt risk assets and even bonds.
As of today the economic data is sending mixed messages to say the least, as there are strong cases for all three scenarios. GDP estimates for the first quarter could give us some more clues as to what lies ahead this year, and we will need some more time to digest the economic and inflationary data coming our way.