If you have been following the economic news, there has been a lot of wishful thinking that a “soft landing” can be accomplished.
What is a “soft landing”? Well in my wording, we have the government and Central Banks interfering with the economy:
Massive amounts of money was added to the economy (specifically in 2020 and 2021) with the excuse of having to rescue everyone from the pandemic (as well as funding the war in Ukraine). This created raging inflation (the Biden Administration is mostly to blame but the Trump Administration started this latest round of inflation). So to counter inflation, interest rates were increased. Higher interest rates discourage borrowing, thus slowing the economy down. The risk being that, as businesses reduce operations, there might be rising unemployment.
A “soft landing” is the concept of the Central Banks and government getting this just right, enough to tame inflation but not too much which would create a depression.
“As the US financial class debates an economic “soft landing,” thunderous crashes can be heard in other parts of the world.”
Some people think the USA can be seen in isolation from the rest of the world. But it doesn’t take much to realize that the policies the USA pursues impact the rest of the world (our decisions have hurt the rest of the world badly) and the rest of the world impacts the USA.
The USA economy is still the largest in the world, but we aren’t the only economy and in modern times the economies of nations are very much tied together.
Thus my interpretation of the current situation is that the soft landing in the USA is merely a delay.
As an individual, what should you be concerned about if we don’t have a soft landing?
Unpredictable prices: inflation may come surging back even worse as the government and Central Banks attempt to stimulate the economy or some deflation as businesses attempt to lower prices in order to keep selling.
Unemployment: businesses may attempt to cut costs by letting go of employees. Thus you might lose your job and you may find it difficult to find a new job.
Violence: turmoil can grow as large numbers of people are unhappy with the situation and demand change.