This research was published on May 6, 2024

Less than a year ago, many pessimists rejected the possibility of a soft landing for the U.S. economy. They argued that U.S. resilience was a confluence of lucky factors, such as pandemic-era savings that would eventually run out. As inflation moderated and growth remained remarkably strong, they grudgingly had to accept that the economy is far more resilient than they had thought.

A recent string of disappointing macroeconomic data has given pessimists new resolve. After three months of hot inflation data, the otherwise smooth path of disinflation looks stalled. Expectations for interest rate cuts, as many six at the start of the year, have shrunk to perhaps just one. And equity markets are off recent record highs.