Torsten Sløk, the chief economist at Apollo Management, believes a soft landing for the US economy is unlikely to occur. In a recent statement, he stated that this outcome has less than a 50% chance of happening due to the delicate balance between easing financial conditions and the lingering effects of the Fed’s interest rate hikes.
Previously, Sløk had been an advocate for a soft landing, but his views have shifted as new economic data has emerged. One factor that has contributed to this change is the improved financial conditions in the economy. Companies are issuing more high-yield and investment-grade bonds, and the IPO market is reviving. Additionally, there has been an increase in mergers and acquisitions. These improvements have also helped create a stronger job market, with January’s jobs report adding 353,000 jobs to the economy.
However, despite these positive developments, there are some negative factors that are slowing down consumers, firms and bank lending. The lagged effects of the Fed’s rate hikes have resulted in high interest rates and made borrowing money more expensive for many people and businesses. This new data leaves the economy in a precarious equilibrium between these opposing forces, making it increasingly difficult for a soft landing to occur as predicted by Sløk