Can price pressures return to normal in 2025 without a jump in unemployment? If they do, it could mean the “soft landing” investors and economists have been 🍷watc𒈔hing for.

For the past two years, the Federal Reserve has worked to tame inflation and cool down the economy without tipping it into a 澳洲幸运5官方开奖结果体彩网:recession. While the central bank didn't reach its annual 澳洲幸运5官方开奖结果体彩网:goal of 2% inflation in❀ 2024, it did keep a lid on unemployment, and the economy continued its growth. Some econ💝omists remain hopeful a soft landing could arrive in the new year.

“We continue to believe that we're in this soft landing phase where U.S. economic growth remains resilient through 2025,” said Ashish Shah, chief investment officer of public investing at Goldman Sachs Asset Management.

Tracking the Chance of a Soft Landing

Economists look at inflation, the labor market, 澳洲幸运5官方开奖结果体彩网:gross domestic product (GDP) and otꦅher economic indicators when watching for a soft lan🥀ding.

According to calculations by Wells Fargo, the probability of a soft landing increased two percentage points from their last estimate to 42% when taking into account third-quarter data. Meanwhile,ไ tꦉhe probability of a recession decreased by the same amount, to 28%.

Their research also examined another possibility: 澳洲幸运5官方开奖结果体彩网:stagflation, in which inflation rises along with the unemployment rate. The probability of that scenario was lower than the odds of a rece🧸ssion. 

Inflation Still Needs to Fall. What If It Doesn't?

The Federal Reserve needs price pressures to slow in 2025 to achieve a soft landing. Some forecasts indicate that the risk of inflation from President-elect Donald Trump's policies could exacerbate already stubborn inflation.

“Tariffs stand to throw some sand in the gears of economic growth next year and stymie inflation's return to the Federal Reserve's target,” said a Wells Fargo note from a group of analysts headed by Chief Economist Jay Bryson.

In addition to stubborn inflation, many economists think economic growth will remain strong, the Federal Reserve will 澳洲幸运5官方开奖结果体彩网:keep interest rates elevated, and tariffs are likely to r𒈔aise prices. That could create 🐈a situation in which there's no landing at all.

“Instead of landing, the U.S. economy may simply refuel next year,” wr𝐆ote Sal Guatieri, senior economist at BMO.

What About a Recession?

A soft landing would be a rarity for the Federal Reserve. Out of the last nine times the Fed raised rates, a recession ensued after eight, according to analysis by Piper Sandler. However, this time, a is not an outcome that 澳洲幸运5官方开奖结果体彩网:most economists think is likely. 

“Our suite of recession models showed the lowest probabiꦐlity of recession at the three- and six-month horizons in more than two years,” wrote Matthew Martin, senior U.S. economist at Oxford Economics.

However, uncertainty around 🐲the economy, especially over the impact of tariffs, could mean that economic growth𓂃 comes in lower than expected.

“A hard landing, or recession, is not our base case, but the risk of such a scenario would rise in the event of severe disruptions to global trade,” wrote Wells Fargo.