The economy is flashing more warning signs that a soft landing may not be possible, and yet another stronger-than-expected jobs report this Friday may be the nail in the coffin. For a year now, the Federal Reserve has been navigating a narrow path to bring down inflation and avoid a recession. Eight times over the past 12 months, the central bank has raised interest rates, which affect consumer and business loans, in a bid to cool down the economy and prevent a redo of the 1970s. But it doesn’t exactly seem to be working.
Wages are rising and people are still spending money in droves, which is great news for the individual American, but not so much for the Fed. It all adds up to more upward pressures to inflation and a harder job ahead for Fed chair Jerome Powell, or “crashy vibes,” in the words of Bank of America strategists led by Michael Hartnett. In their Thursday “Flow Show” note to clients, they wrote that things were “set to worsen” in March unless Friday’s jobs report for February suggested the labor market is cooling. The Flow Show argued the crashy vibes would just get worse without soft payroll numbers, and the numbers were indisputably not soft.
