A Wealth of Common Sense: No Soft Landing

Markets have been tricky this year amid a rapid rise in interest rates. That’s led to a number of investors seeing a “hard landing” for the economy. They see the need for a recession to wring out today’s high inflation.

Some still see a soft landing. They tend to get more vocal after the market has a few up days. But the data is increasingly pointing towards a more challenging time ahead for everyday investors.

For starters, those expecting the Fed to pause their rate hike policy soon may be misguided. The latest jobs report shows that the labor market remains strong, particularly going into the holiday season.

Plus, inflation still remains well over today’s rising interest rates. That’s another factor showing that rate hikes are likely here to stay.

Meanwhile, we’re starting to see data that the housing market is about to freeze up. Soaring mortgage rates are keeping first-time homebuyers out. And existing homeowners have sufficient equity to sit through a poor market, so sales are likely to dry up.

Finally, with earnings season, we’re seeing big drops in a number of companies. Many aren’t able to raise prices over their increased costs due to inflation. Others are dealing with a pullback in consumers. Both point to more trouble for the economy now – and in the quarters ahead.

To read the full analysis, click here.