Johann Lee in NerdWallet: Will the Fed Pilot the Economy into a Soft Landing?

In economics, a “soft landing” occurs when a central bank, like the U.S. Federal Reserve, raises interest rates to control inflation without causing a recession. This is currently the goal of the Fed after its aggressive campaign, comprising 11 rate raises in the past 18 months to tackle rapid price increases.

This pursuit of a gradual and measured approach has largely succeeded, as the Consumer Price Index (CPI) only increased by 3% in June – a significant improvement compared to the 9.1% annual increase in June 2022. During this period, the unemployment rate has remained below 4%, and the Gross Domestic Product (GDP) has maintained positive growth.

But does this signify that the economy is on track for a soft landing? The economic data for August might offer investors the necessary perspective to address this question. NerdWallet turned to Johann Lee, CFA, director of research at AlphaCore Wealth Advisory, to learn more. According to Lee, the markets are expecting moderate CPI growth of around 2.2%. However, if the inflation data comes in higher than expected, it could roil stocks and bonds.

“A hotter-than-consensus CPI report would potentially suggest higher bond yields, thus a selloff in bond markets,” Lee tells the publication, adding that it “could put pressure on equities as discount rates move higher.”

However, if the CPI data comes in at a lower figure, it could still create volatility if “investors digest the news as demand rapidly falling.”

In other words, the August CPI report may serve as a crucial gauge of whether a soft landing is on the horizon. If the CPI is excessively elevated, there might be a need to raise interest rates to control inflation. Conversely, if the CPI is too low, it could signal an impending recession. Investors will soon have more clarity when the data is officially released on August 10.

Click here to read the entire NerdWallet article.


This material is being provided for informational purposes only. This commentary represents the current market views of the author, and AlphaCore Capital in general, and there is no guarantee that any forecasts made will come to pass. Due to various risks and uncertainties, actual events, results or performance may differ materially from those reflected or contemplated in any forward-looking statements. The opinions are based on market conditions as of the date of publication and are subject to change. No obligation is undertaken to update any information, data or material contained herein.

Neither the information nor the opinions expressed herein constitutes an offer or solicitation to buy or sell any specific security, or to make any investment decisions. AlphaCore provides investment advice only within the context of our written advisory agreement with each AlphaCore client. Past performance is not indicative of future results. The value of an investment may be affected by a variety of factors, including economic and political developments, interest rates and foreign exchange rates, as well as issuer-specific events.



* Indicates a required field

I am interested in learning about the services of AlphaCore Wealth Advisory LLC, an SEC registered investment adviser. By submitting my name and phone number (which I intend and agree will constitute my electronic signature for the purpose of agreeing to this consent), I expressly consent to be contacted by AlphaCore by phone and/or email, even if the number I provide is on a Federal and/or a state "Do Not Call" list. I represent that I am authorized to provide this consent on behalf of the phone number provided and that such consent is given voluntarily. I understand that I am not required to enter into this consent as a condition of purchasing any property, goods, or services.

This consent is effective unless and until revoked by me, which may be done at any time by emailing, by calling 858-875-4100, or by notifying the representative that calls you.

You may request a copy of this consent or our privacy policy to be emailed or mailed to you by contacting us. Click here to read AlphaCore's privacy policy.

This field is for validation purposes and should be left unchanged.