For the past two years, a daunting question has hung over the U.S. economy: Are we heading toward a soft landing or a recession?
Every few weeks, a new bit of data — fresh inflation numbers, a new jobs report, a change in interest rates — gives us a clue as to which direction we’ve taken, like blinking lights on a radar screen.
To interpret those signals, Financial Planning is starting a new series: “Crash or Land.” Here we’ll hear from some of the nation’s top economic analysts, from big names like JPMorgan and Goldman Sachs to newer voices like Cetera Financial Group and the social investment network eToro. Taken together, their insights will give us a sense of the economy’s latest course — and what it means for wealth management.
For our inaugural edition, we’re taking a look at the holy grail of data points: a meeting of the Federal Reserve. More than any other policymaker, the Fed has been in the pilot’s seat, carefully dialing up interest rates to tame inflation without crashing the economy. In 2022 and 2023, the central bank raised rates 11 times — but more recently it’s been holding them steady, as it did once again on Wednesday.
“Today, we decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings,” Fed Chair Jerome Powell said after the meeting. “Given how far we have come, along with the uncertainties and risks that we face, the Committee is proceeding carefully.”
READ MORE: Ask an advisor: Are we in for a soft landing?
Only a month ago, the Fed indicated that it will probably cut interest rates three times in the second half of 2024. The markets swooned over the news, with the S&P 500, Dow Jones and Nasdaq all jumping by about 1.4%.
Wednesday was less jubilant. Though Powell once again hinted that monetary easing is on its way, his cautious tone gave many the impression that the first cut is still a ways off — and perhaps unlikely to come at the Fed’s next meeting, in March. As Powell spoke, the S&P 500 fell by 1.6%.
“No one is declaring victory,” Powell said. “That would be premature.”
So where does that leave us? Is the economy closer to landing or to crashing? And what does the news mean for investors and their financial advisors? Which investments will benefit from the Fed’s decision, and which ones will get hurt?
To find the answers, Financial Planning reached out to some of the sharpest and best-informed minds in wealth management. Scroll through the cardshow below to read their comments and statements: