Lower inflation without recession           

Photo: Linkedin

By Isaac Cohen*

The Commerce Department informed last week the Consumer Price Index in the United States went down to 3,2 percent in October, from 3.7 percent in September. This was seen as additional evidence that the US economy is approaching a “soft landing.” The term is used to describe how inflation has gone down without a recession, from a peak of 9.1 percent reached in June 2022, with economic growth of almost 5 percent in this year’s third quarter, while unemployment has remained under 4 percent.

The Wall Street Journal (11/16/23) highlighted it in the front page, as the main headline above the fold, saying: “Economy Closes In On a Soft Landing.” It added this would be “highly unusual,” because “in the past 80 years the Federal Reserve has never managed to bring inflation down substantially without sparking a recession.”

According to Jeanna Smialek, who follows the central bank for The New York Times (11/19/23), those who see this outcome as “almost miraculous,” have coined the new term “immaculate disinflation.” While the President of the Federal Reserve Bank of Chicago, Austan Goolsbee calls it “the golden path.”

Federal Reserve chair Jerome Powell has clearly said “a soft landing is a primary objective,” as it is to achieve 2 percent inflation. In that sense, some indicators reveal a moderate slowdown, such as less wage increases, particularly among low-wage workers, while in October retail sales declined slightly, 0.1 percent from the previous month.

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

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