New US Job Numbers Point to Fed’s Soft Landing Goal

For those out there waiting for a dip in financing costs, this week offered hope on both sides of the Atlantic. The European Central Bank said it could begin lowering interest rates in June, projecting that inflation will fall back to its 2% target next year. In the US, Federal Reserve Chair Jerome Powell also said his central bank is getting close to the confidence level needed to start lowering rates. The comments are a new chapter in an inflation fight that started during the pandemic and was exacerbated by Russia’s war on Ukraine. But even as the Fed raised rates, the US economy held tough—from growth to consumer spending and labor. Powell and his colleagues have said they want to see more balance between supply and demand in the labor market, and February’s jobs report pointed to that eventuality being close aboard. To some investors, the moderating job and pay gains suggest the US economy has reached a sort of sweet spot where it will keep expanding without much risk of a re-acceleration in inflation. There’s another name for that.

Such an imminent soft landing has equity markets on a tear and consumers more upbeat. For President Joe Biden, that enviable economy should, historically speaking, make re-election a cakewalk. On several metrics, from violent crime to income equality and and wage growth, Biden’s presidency has outperformed that of his predecessor, according to data and analysis compiled by Bloomberg Opinion columnists. Still, with eight months to go, his poll numbers have been weighed down by the legacy of inflation, the immigration debate and age concerns that dog both candidates. But at his State of the Union address Thursday, the Democratic incumbent made a forceful effort to erase any doubt about his vigor.