• Mon. Feb 26th, 2024

Apollo Chief Economist Skeptical of US Soft Landing: Balancing Financial Conditions and Rate Hike Effects

ByEditor

Feb 12, 2024
US Unlikely to Experience Soft Landing

Torsten Sløk, the chief economist at Apollo Management, has recently expressed his belief that a soft landing for the US economy is currently unlikely. In an interview, he stated that the outcome has less than a 50% chance of occurring due to the delicate balance between easing financial conditions and the lingering effects of the Fed’s interest rate hikes.

Previously, Sløk had been optimistic about a soft landing, but recent economic data has led him to shift his stance. One factor behind this change is the improved financial conditions in the economy. Companies are issuing more high-yield and investment-grade bonds, the IPO market is reviving, and mergers and acquisitions are 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 signs, Sløk points out that the lagged effects of the Fed’s rate hikes are slowing down consumers, firms and bank lending. This has resulted in high interest rates and made borrowing money more expensive for individuals and businesses alike. As a result of this new data, Sløk believes that the economy is in a fragile equilibrium between these opposing forces

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