Soft Landing Puts Investors in Bewildered State
You asked for a soft landing. You got it.</br></br>If investors are finding the economic environment bewildering these days, they shouldn't complain. Confusion is the consequence of the long-hoped-for soft landing, that catch-all phrase that connotes moderating economic growth, declining inflation and lower interest rates. After all, a soft landing is neither fish nor fowl. It isn't a powerful economy that drives corporate earnings (and eventually inflation) sharply higher, but neither is it a sickening plunge into recession.</br></br>"We're all groping for the trend in the economy, and the data are contradictory," says Brian J. Fabbri, chief economist at Midland Montagu in New York. "If it weren't and the statistics were all bad, we'd be talking about a recession. If the statistics were uniformly good, we'd be talking about an accelerating economy and no need for the Federal Reserve to ease" credit.</br></br>But all this leaves investors confused and worried. Because the economic picture is so puzzling, they don't know whether to buy or sell stocks, and which stocks they should own. That's particularly important now because this is the stage at which the economy is delicately balanced and could move quickly either into a recession or acceleration.</br></br>And that's the trouble with the "soft landing" analogy. While an airplane taxis to the gate and shuts off its engines after landing, the economy just keeps rolling right along.