Soft Landing or Bumpy Road for the Economy?

WSJ Opinion: Free Expression

Gerard Baker, Editor at Large, The Wall Street Journal

Society & Culture, News

4.6 • 591 Ratings

🗓️ 22 March 2024

⏱️ 30 minutes

🔗️ Recording | iTunes | RSS

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Summary

With the Federal Reserve signaling it still plans to cut interest rates this year, has the inflation threat really abated? Heightened optimism about a soft landing has cooled somewhat as inflation at the start of the year has shown signs of persisting. What happens next will have big political implications too. In an election year, more voters seemingly have a negative opinion of how Joe Biden is handling the economy. If interest rates don’t fall appreciably, it won’t help his re-election prospects. On this episode of the Free Expression podcast, former Obama White House chief economist Jason Furman tells Gerry Baker why he’s concerned about continuing inflation risks, how rising mortgage rates are causing so much pessimism in households nationwide, and what he thinks the Fed will do next. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Boardrooms love buzzwords.
0:01.9	AI, climate, resilience.
0:03.7	But what do they actually mean for CFOs and execs trying to survive the next earnings call?
0:08.3	That's where the pre-read comes in.
0:09.8	Real experts and real talk.
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0:17.1	From the opinion pages of the Wall Street Journal, this is Free Expression with Jerry Baker.
0:24.5	Hello and welcome to Free Expression from the Wall Street Journal editorial page.
0:28.5	I'm Jerry Baker, editor at large of the journal.
0:30.8	If you're not already a subscriber, please do sign up wherever you do your podcast listening.
0:35.1	This week, the US economy.
0:39.4	Are we still on target for that soft landing? Or could it yet be a bumpy ride? On Wednesday, the Federal Reserve once again left
0:44.7	its key policy interest rate unchanged, had a 20-year high of more than 5%. But Jerome Powell,
0:51.9	the Fed Chair, made it clear that the central bank still expects to cut rates this year.
0:57.6	And forecasts from Fed policymakers pointed to three quarter percentage point cuts by the end of 2024.
1:04.1	This despite the fact that the progress that's been made in reducing inflation over the last two years does seem to have stalled in the last
1:11.9	couple of months. The Fed's favourite indicator of inflation, the price index for personal consumption
1:17.1	expenditures or PCE, slowed to an annual rate of 2.4% in February. That's down from more than
1:23.6	7% nearly two years ago. But the core rate, the crucial core rate that is, stripping out
1:29.2	volatile items like food and energy, was at 2.8%. And that is well above the central bank's
1:36.1	target of just 2%. What's more, inflation actually seems to be re-accelerating, with prices
1:42.7	rising in the last three months at a higher
	...

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