I’ve heard that term a lot over the past 8 months. What would that even look like?
In: Economics
The very simplified answer is that it means reducing inflation from high levels to acceptable levels (2-3%) WITHOUT causing a recession.
To expound a bit, this is the job of the US Federal Reserve (“The Fed”). The Fed has really one thing they control, which is “interest rates”. When they want to stimulate the economy, they lower interest rates, which means banks can get good deals on money via loans, and thus money becomes a bit more accessible overall.
But money becoming super accessible is part of what causes inflation. So, to help reduce inflation, the Fed *raises* interest rates. This makes money a bit less accessible, and tends to slow the economy down a bit. As you might have guessed, slowing down the economy too much leads to a recession, which is the “hard landing”.
It’s a very difficult balancing act to keep inflation at reasonable levels without accidentally causing a recession. Especially when inflation gets as high as it did these past few years, I’ve heard it compared to landing a smoking plane. From what I’ve heard though (I’m not an expert), Jerome Powell (the current chairman of the Fed) is actually doing a great job so far and may succeed in giving us a (mostly) “soft landing”.
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