The US economy is floating toward a gentle landing.

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The financial and economic communities have been questioning for months whether the United States would be able to pull off a historic soft landing that would rein in inflation and stave off a recession. As it happens, that may have already occurred.

Even if GDP and employment growth were strong, the Bureau of Economic Analysis amended its numbers on Thursday to reveal that, in the third quarter of 2023, inflation increased at an annualized rate of 2%, just on line with the Federal Reserve. This is based on the central bank's preferred gauge of how quickly prices are rising—the core Personal Consumption Expenditures Index—which does not include volatile food and energy expenses.

Naturally, there is still a chance that inflation will pick back up speed, just as it did following the government's temporary attempts to rein it in in the late 1960s and early 1970s. A slump in the economy is still a possibility, particularly if growth slows and Fed officials decide not to lower interest rates in the upcoming year. However, if the present pattern continues, it will represent an uncommon economic development that only a small percentage of experts in the field predicted. A recession within a year was anticipated by 85% of analysts surveyed by the Financial Times in the beginning of 2023.

The most often given instance of a "soft landing" occurred in 1994–1995 when Fed Chair Alan Greenspan was able to raise rates and then lower them just in time to prevent any negative effects on the economy. He gained his moniker as "the maestro of monetary policy" with this performance. However, the crucial background for this achievement—which is sometimes omitted in recountings—was that inflation had not yet started to increase at the time the Fed started tightening. Instead, Greenspan & Co. were acting in anticipation of a potential increase in consumer prices.

Recession has usually been the outcome when the Fed has tightened in reaction to a real spike in inflation. That has occasionally been a deliberate choice. The devastating double-dip recession of the early 1980s was brought on by the Fed in an attempt to end stagflation. There have been other instances of unluck: If Iraq hadn't invaded Kuwait, which caused oil prices to soar, Princeton economist and former Fed Vice Chair Alan Blinder contends that the central bank might have managed "a perfect soft landing" in the early 1990s.

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