Torsten Sløk, the chief economist of Apollo Management, has recently stated that a soft landing for the US economy is currently unlikely to occur. This shift in opinion comes after analyzing new economic data that has emerged.
Previously, Sløk had been a proponent of a soft landing. However, his views have changed as he sees a more precarious balance between easing financial conditions and the lingering effects of the Fed’s interest rate hikes. Companies are now issuing more high-yield and investment-grade bonds, with the IPO market reviving and mergers and acquisitions increasing. These improvements have also contributed to a stronger job market, with January’s jobs report adding 353,000 jobs to the economy.
However, despite these positive developments, the lagged effects of the Fed’s rate hikes are still slowing down consumers, firms, and bank lending. High interest rates are making borrowing money more expensive for individuals and businesses alike.
This new data leaves the economy in a fragile equilibrium between these opposing forces, making it seem unlikely that a soft landing will occur as previously predicted by Sløk.