Looking for That ‘Soft Landing’ (Editorial)

We believe in taking good news where we find it, and two recent reports signaled positive news for the U.S. economy.

First was the Labor Department’s jobs report released Jan. 6, which showed that employers added 4.5 million jobs in 2022, the second-best showing since 1940, when such records began being kept. 

In December, employers added 223,000 jobs and the unemployment rate fell to 3.5%, returning to its pre-pandemic level in early 2020, the lowest since 1969.

Second was Thursday’s news that the consumer price index, the key measure of inflation, fell to 6.5% in December, largely because of decreasing energy prices. It was the sixth straight monthly decline.

While inflation — a result of surging post-pandemic consumer demand, supply chain snarls, the vast sums of government COVID relief funding injected into the economy, and Russia’s war on Ukraine — remains far too high, this latest report indicates it is continuing to cool.

“Logistics prices have also slowed materially; shipping costs are back to where they were pre-Covid,” Jake Oubina, senior economist at Piper Sandler, told The Wall Street Journal. “These were all inputs that a lot of retailers had to pass through to consumers, and the alleviation on the cost side is creating the wherewithal to discount more aggressively as we head into 2023.”

Could it be that the Federal Reserve’s strategy of raising interest rates will have the desired effect of a “soft landing” for the U.S. economy, one that avoids the hard landing of a recession? We don’t know, but, as always, we live in hope.