Is the U.S. Poised for an Economic ‘Soft Landing’? Insights from the Upcoming Jobs Report

by Madison Thomas
US Economy Soft Landing

The much-anticipated concept of a “soft landing” for the U.S. economy might be closer to reality, as indicated by the forthcoming jobs report this Friday. The November employment data is expected to shed light on the potential realization of this scenario.

Recent economic indicators have been somewhat positive. There’s a noticeable decline in job vacancies and a reduction in job switching compared to last year, suggesting possible slowdowns in wage growth and inflation. The hiring pace is decelerating, and there’s been a notable moderation in price hikes.

These trends hint at the possibility that the Federal Reserve could successfully reduce inflation to its target of 2% annually without triggering a severe recession, which is essentially what a soft landing entails.

However, this process is not without its challenges. The danger of the economy tipping into a recession looms large. The unemployment rate has slightly increased from a low of 3.4% at the start of the year to 3.9%, with more Americans actively seeking but not immediately finding jobs. Unemployment assistance numbers, though still low, are on the rise. Additionally, job growth has been largely concentrated in specific sectors like health care, hospitality, and government, rather than being widespread.

The Labor Department’s jobs report for November is anticipated to reveal an addition of around 172,500 jobs, a modest increase over October’s 150,000. This figure is slightly inflated due to the return of United Auto Workers and Hollywood actors after strikes. These groups are expected to contribute around 40,000 to the total job gains.

The cooling of hiring is partly attributed to the Federal Reserve’s significant interest rate hikes, which have increased borrowing costs and dampened consumer and business spending, affecting sales of big-ticket items and investments. The average monthly job growth has decreased substantially compared to last year.

The relatively low unemployment rate notwithstanding, there’s concern that a slight increase could trigger a self-perpetuating cycle of reduced spending and further layoffs, potentially signaling the onset of a recession.

If recession indicators emerge, Federal Reserve Chair Jerome Powell might hint at upcoming rate cuts to reduce borrowing costs, likely sparking a financial market rally and potentially bolstering the economy.

Currently, the outlook from most analysts is cautiously optimistic, expecting continued growth albeit at a slower pace, and a gradual decrease in inflation. The economy is predicted to grow at a modest 1.5% annual rate in the last quarter of the year, a slowdown from the previous quarter’s 5.2% growth rate. Such moderated growth is seen as beneficial for reducing inflation while sustaining steady employment rates.

Despite the Federal Reserve’s benchmark rate hikes – 11 times since March 2022, reaching about 5.4%, the highest in 22 years – the economy continues to expand. These hikes have significantly raised the cost of mortgages, auto loans, and business borrowing.

Inflation has seen a substantial decrease, dropping from a high of 9.1% in June 2022 to about 3.2% recently. The Fed’s preferred inflation measure indicates a 2.5% annual increase over the past six months, nearing the central bank’s target.

This improvement has led to speculation of possible rate cuts by the Fed, potentially starting as early as March, as anticipated by Wall Street traders. However, most economists expect fewer rate cuts than the markets predict.

Fed official Christopher Waller, usually advocating for higher rates, hinted that rate cuts could occur by spring if inflation continues to decline. Contrarily, Powell recently cautioned against assuming that the Fed’s rate hikes are sufficient to curb inflation or speculating on potential rate cuts.

Powell did acknowledge that the current interest rates significantly restrict growth, which many analysts interpret as an indication that the Fed may cease further rate increases.

Frequently Asked Questions (FAQs) about US Economy Soft Landing

What is a ‘Soft Landing’ in the Context of the US Economy?

A ‘soft landing’ refers to the scenario where the Federal Reserve successfully lowers inflation to its 2% annual target without triggering a severe recession. It involves cooling down the economy and reducing inflationary pressures in a controlled manner, avoiding the extreme of a significant economic downturn.

How Does the November Jobs Report Influence the US Economy’s Soft Landing?

The November jobs report is crucial as it provides insights into the hiring trends, unemployment rates, and sector-specific growth, which are key indicators of economic health. A steady addition of jobs, as indicated in the report, suggests a controlled economic slowdown, which is essential for a soft landing.

What are the Risks Associated with Achieving a Soft Landing in the US Economy?

The main risks include the potential of the economy slowing too much and slipping into a recession, as evidenced by rising unemployment rates and concentrated job growth in limited sectors. Overcooling the economy could lead to increased joblessness and reduced consumer spending, further hampering economic growth.

How Have Federal Reserve Policies Impacted the Prospect of a Soft Landing?

The Federal Reserve’s aggressive interest rate hikes, aimed at controlling inflation, have significantly influenced borrowing costs, impacting consumer and business spending. These policies are central to steering the economy towards a soft landing by moderating economic growth and inflation rates.

What is the Current Outlook for the US Economy and Inflation Rates?

The current outlook is cautiously optimistic, with expectations of continued, albeit slower, economic growth and easing inflation. The economy is projected to grow at a modest rate, and inflation has been decreasing, suggesting that the Federal Reserve’s measures are having the intended effect.

More about US Economy Soft Landing

  • Understanding the Federal Reserve’s Role in the Economy
  • Insights into US Jobs Reports and Economic Indicators
  • Exploring the Concept of a Soft Landing in Economics
  • Analyzing the Impact of Interest Rate Hikes on the Economy
  • Tracking US Unemployment Rates and Labor Market Trends
  • Assessing the Current State of US Inflation and Economic Growth

You may also like


EconBuff December 8, 2023 - 1:50 pm

hey, great job on covering the complexities of the soft landing concept. But, maybe a bit more on global factors would be helpful?

James_K December 8, 2023 - 5:06 pm

Solid overview, but there’s a typo in the section on inflation rates – should be “has seen” not “has see”. Just a heads up!

Sarah89 December 9, 2023 - 5:03 am

good analysis but kinda dry? could use more on how this affects average folks like us, not just big econ terms and numbers.

Mike Johnson December 9, 2023 - 7:19 am

really interesting piece, but I think you’ve glossed over the potential negatives of the Fed’s rate hikes. Its not all sunshine and roses, you know?


Leave a Comment


BNB – Big Big News is a news portal that offers the latest news from around the world. BNB – Big Big News focuses on providing readers with the most up-to-date information from the U.S. and abroad, covering a wide range of topics, including politics, sports, entertainment, business, health, and more.

Editors' Picks

Latest News

© 2023 BBN – Big Big News