Economic outlook: a new balance of risks

Before the summer, the US economy was growing above potential. The Fed was focused on inflation. It was debatable whether monetary policy was restrictive enough. Now the perception of risks is quite different. Inflation has fallen into line. The job market has weakened – not to the point where businesses are launching mass layoffs but enough to freeze hirings. In this situation, a soft-landing trajectory could bifurcate into a recession. Jerome Powell looks now in a hurry to cut ...