'Soft Landing' For US Economy Is The Right Path, Central Banker Says

The U.S. economy continues to demonstrate resilience. That’s according to Federal Reserve Bank of Minneapolis President Neel Kashkari.

What Happened: Kashkari aligns with the Fed’s economists’ outlook that the horizon is clear of an impending recession.

Despite the ongoing challenge of the Fed getting inflation down to its 2% target, indicators including a persistently low unemployment rate and a gradual decrease in core inflation suggest steady progress.

Regarding the prospect of additional rate hikes, Kashkari indicated the Fed's goal remains to bring inflation back down to the 2% target — despite the 11 rate hikes since last year. He echoed Federal Reserve Chairman Jerome Powell, highlighting the need to "stay the course.”

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Why It Matters: The American economy is digging its way out of the inflation pit, Kashkari noted. There remains some understandable frustration due to the duration of the journey.

The job market’s resilience, defined by a low unemployment rate of 3.6%, points towards economic resilience that bodes well for the future.

Fiscal spending, particularly in infrastructure and efforts to revitalize manufacturing, contributed to the economic landscape. That’s a positive influence on the inflation outlook, Kashkari said.

On the "soft landing," Kashkari noted that the full effects of the Fed's rate hikes have not been felt yet. We should see a slight uptick in unemployment, he added. That’s preferable to a deep recession.

The Bureau of Economic Analysis reinforced his cautiously optimistic view. Data, issued Friday, indicates a gradual decrease in price pressures across the economy.

The Personal Consumption Expenditure (PCE) price index fell to 4.1% year-on-year. That’s slightly below projections, which came alongside a reported increase in consumer spending, which fueled investor optimism. The highest price pressures may be in the rearview mirror.

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