Report
Is a soft landing theoretically possible?
A soft landing consists of a fall in inflation, until it no longer exceeds the central bank's inflation target, which does not lead to a significant slowdown in growth. Today, the United States is considered to have achieved a soft landing, if we disregard the additional inflation resulting from the rise in rents imputed to homeowners. But in theory, a soft landing is not possible. Reducing inflation requires, in principle, that the unemployment rate becomes higher than the structural unemployment rate, i.e. that there is a significant increase in unemployment compared to the situation of full employment. In practice, it is questionable whether it is possible for there to be a fall in labour market tightness (a fall in hiring difficulties, a fall in the ratio of job vacancies to job seekers) without a rise in unemployment. This may be the case today in the United States.
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Natixis
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Patrick Artus
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