Unemployment jumped to 10 percent and did not fall back to its pre-crisis low for roughly a decade. In that instance, higher interest rates had helped to prick a housing bubble - the deflation of which set off a chain reaction of financial explosions that blew through global financial markets. The 2000s recession was also relatively mild, but the 2008 downturn was not: It plunged America into the deepest and most painful downturn since the Great Depression. Unemployment began to creep up in July 1990 and peaked at 7.8 percent. The recession that stretched from mid-1990 to early 1991 was much shorter and less painful than the one that had plagued the nation less than a decade earlier - but it was still a downturn. America was hoping that a policy tightening from 1988 to 1989 would not have the same effect. Fed policymakers had raised rates to towering heights to crush double-digit inflation in the early 1980s, costing millions of workers their jobs. Setting a spaceship gently on the lunar surface had been difficult, and yet it had touched down.īy the late 1980s, the term was in widespread use as an expression of hope for the economy. The term “soft landing” first made its way into the economic lexicon in the early 1970s, when America was fresh from a successful moon landing in 1969.
“Markets have trouble seeing exactly where the cracks are.” “The prevailing consensus right before things went downhill in 2007, 20 was for a soft landing,” said Gennadiy Goldberg, a rates strategist at TD Securities. Such lags and uncertainties mean that while data today are unquestionably looking sunnier, risks still cloud the outlook. Those rate moves are trickling through the economy, making it more expensive to buy cars and houses on borrowed money and making it pricier for businesses to take out loans. On Wednesday, policymakers lifted rates to a range of 5.25 to 5.5 percent, the highest level in 22 years and up sharply from near zero as recently as early 2022. Powell are being careful not to declare victory. Powell said that while he was not yet ready to use the term “optimism,” he saw a possible pathway to a relatively painless slowdown.īut it can be difficult to tell in real time whether the economy is smoothly decelerating or whether it is creeping toward the edge of a cliff - one reason that officials like Mr. Powell, the central bank’s chair, during a news conference on Wednesday. Given all that momentum, Fed staff economists in Washington, who had been predicting a mild recession late this year, no longer expect one, said Jerome H. Consumers continue to spend at a solid pace and are helping to boost overall growth, based on strong gross domestic product data released on Thursday. Inflation has begun to cool meaningfully, but unemployment remains historically low at 3.6 percent and hiring has been robust.
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