Apollo Management’s chief economist, Torsten Sløk, has recently revised his stance on the likelihood of a soft landing for the US economy. According to him, this outcome now has less than a 50% chance of occurring due to the delicate balance between easing financial conditions and the lingering effects of the Fed’s interest rate hikes.
In his previous statements, Sløk had been an advocate for a soft landing, but new economic data has led him to shift his opinion. One factor behind this change is the improving financial conditions in the economy. Companies are issuing more high-yield and investment-grade bonds, and there is a resurgence in IPOs. Additionally, mergers and acquisitions are on the rise. These improvements have also contributed to a stronger job market, with January’s jobs report adding 353,000 jobs to the economy.
On the other hand, the lagged effects of the Fed’s rate hikes are still slowing down consumers, firms, and bank lending. This has resulted in high interest rates and made borrowing money more expensive. With these opposing forces at play, it seems that a soft landing may be unlikely as stated by Sløk.