Risk of economic hard landing on the rise

The risk of an economic hard landing is on the rise, says an barclays economist.

The U.S. economy is now at an increased risk of having a “hard landing,” according to economists at Barclays.

Using language usually reserved for discussing the economic outlook in China, Barclays’ Michael Gapen writes in a note Tuesday that in the wake of tax cuts the “risks of a hard landing are rising” for the U.S. economy.

“We believe that tax cuts will stimulate household spending faster than business investment can improve productivity and, as a result, some of the output growth in our forecast will be accomplished through additional hiring,” Gapen said.

“We see the unemployment rate drifting lower over the course of the year, raising alarms in some corners of the [Federal Open Market Committee] about future inflation pressures or, more likely, financial stability concerns.”

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That’s along the same line as I wrote in another thread. Without further improvement to productivity, additional stimulus to the economy above and beyond the sustainable long term growth potential will really fan up inflation and the fed would slam on the brake hard. It’s better to have more moderate sustainable growth.

Yawn. Unless the fed goes crazy with rates, it’ll be fine. They have no reason to go crazy with inflation under 2%. Economists are all stumped at how unemployment is so low and inflation isn’t increasing. They refuse to acknowledge their own data points for labor force participation and part-time workers that want to be full-time.

Inflation is good. Haven’t had any in 12 years. The middle class deserves and wants some inflation. It is about time. And personally I think it will make people more optimistic.
When you have more money in your pocket you are happier, even if the rent is higher…

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