The Fed wants a ‘soft landing’ for the economy. The market says get ready for a crash

Fortune ^ | 5/11/22 | Will Daniel

[EBH]

A soft landing is better than a hard one, especially when it comes to the economy.

It’s the difference between turning the booming Biden years—even with 40-year-high inflation—into a sustainable trend, instigating a mild recession, or something even worse.

The Federal Reserve, the institution caught between a rock and a hard place, got even more bad news on Wednesday: inflation remains an issue. Although the Consumer Price Index saw a deceleration in April, consumer prices are still increasing at an 8.3% annual rate.

The Fed famously has a dual mandate to promote price stability and maximum employment, and the central bank has been forced to raise interest rates in hopes of bringing down what has proven to be persistent inflation.

The problem is stocks are throwing a fit. The S&P 500 is now down nearly 18% year-to-date, and the tech-heavy Nasdaq is faring even worse, plummeting over 28% this year.

There are also growing signs that the housing market is beginning to feel the sting of soaring mortgage rates. And expectations for economic growth are falling, too. The Conference Board now predicts the U.S. economy will grow by just 2.3% this year, less than half of what was seen in 2021.

Investment banks, former Fed officials, billionaire investors, and even your neighbor are all predicting economic doom ahead.

Here’s what will play into just how hard or soft this landing is.

[EBH]

Everyone in my little sphere is saying 'depression.'

[ClearCase_guy]

the booming Biden years

"I own a mansion and a yacht." -- Elmer Fudd

[Shady]

It’s all by design, Kids. They want us broke and they want us dead.

[Socon-Econ]

Ronald Reagan kept this from happening while his Fed brought inflation down — by simultaneously pursuing deregulation and pro-growth tax policies. The results were so good that his Treasury Secretary joked that he thought he was dreaming.

[CedarDave]

It’s all by design, Kids. They want us broke and they want us dead.

True, in their view we have abused Mother Earth and they a helping with payback.

[nathanbedford]

The Fed famously has a dual mandate to promote price stability and maximum employment

Unlike the song, "love and marriage you can't have one without the other" in today's environment you simply cannot have price stability and maximum employment. In reality the Fed is charged with playing out an oxymoron.

The more the Fed achieves price stability by raising interest rates, the more it increases unemployment numbers. The more it lowers interest rates and floods the economy with cash, the more it promotes inflation.

Yes, today the Democrats will contend that they have high employment but those figures are masked and unreal. The real number that we should be worried about is the last report that shows a fall in productivity. If inflation can be defined as too much money chasing too few goods or services, week productivity decreases the supply of goods and services and, in turn, makes the more goods and services expensive-or, if you like, increases inflation.

Many of us have been writing for some time that our fiscal and monetary profligacy have now brought us to a place where at best, that is if we are lucky, the only power we have left is to choose our pain. We can choose inflation or we can choose unemployment but we must have one or the other.

This choices forced upon us, as I said, because of our profligacy. The Fed cannot solve this problem without causing pain on one side or the other. If we lose even this much power to choose, if the Fed, for example, puts a foot down wrong anywhere or if Congress continues to burn money, we will find ourselves in a world of stagflation in which we get not just unemployment or inflation but both.

This is the dismal place profligacy, led by Democrats but condoned by Republicans, has brought us to.

[glorgau]

The madness of crowds. It’s a rush for one direction or the other.

[9YearLurker]

Bitcoin down 40% in less than two months.

[IncPen]

Bitcoin down 40% in less than two months.

How many will recognize it as a wealth transfer? How many will oppose the FedCoin?

[cranked]

We will severely reap what they have sown.....except for the rich.

[I want the USA back]

They’re all saying “It went down in April.” But it didn’t. The difference between 8.5% and 8.3% is negligible. Let’s see what they say when it goes up at the end of May.

[dynachrome]

I see more spot shortages on shelves at grocery stores. Walgreens was worse the other day. I did not look at the baby formula area.

[Bratch]

[bert]

When wage inflation begins in earnest, there will be a resurgence of the economy

[DesertRhino]

“ It’s the difference between turning the booming Biden years”

Got it... lol

[DIRTYSECRET]

Think Spain kicking out the Moors in 1492. Pinochet taking over Chile. Guiliani getting elected in NYC. Who’s gonna do it in DC? WE haven’t hit bottom. A 1929 crash this October=67 senate seats? We could run the country WITHOUT Biden. Herding 67 cats-I don’t think so.

[subterfuge]

Yes they are doing this on purpose. The inflation is a hidden tax as the rightful President Trump has said. Tax revenues at this point last year were just under $400 billion, this year they are OVER $$800 billion.

[tet68]

the booming Biden years

I’m sorry, I must have blinked.

[minnesota_bound]

The state of the stock market.
https://imgur.com/fJI9lqj