Torsten Slok, Chief Economist at Apollo Management, believes that a soft landing for the US economy is unlikely to occur. According to him, the probability of this outcome is less than 50% due to the precarious balance between the easing of financial conditions and the lingering effects of the Fed’s rate hikes.

Slok’s previous stance was in favor of a soft landing, but his opinion has changed as new economic data emerges. The improved financial conditions in the economy are one factor contributing to this change. Companies are issuing more high-yield and investment-grade bonds, and the IPO market is reviving. Mergers and acquisitions are also on the rise. Additionally, these improvements have led to a stronger labor market, with January’s jobs report adding 353,000 jobs to the economy. However, despite these positive signs, there are negative consequences of high interest rates caused by residual effects of Fed’s rate hikes slowing consumers and firms bank lending which make borrowing expensive.

As a result of this new data, Sl√łk believes that the economy is in a fragile balance between these opposing forces, making it unlikely for a soft landing to occur.

By Editor

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