Your Weekend Reading: Nobody Knows Where the US Economy Will Land

The US economy is cooling just like the Federal Reserve wants, but growth hasn’t stalled—also as the Fed wants. While US gross domestic product for the last quarter exceeded estimates, the central bank’s preferred inflation measure slowed to its lowest pace in more than a year, and the number of temporary workers declined (an uptick can augur a recession). Together, these data points make it likely the Fed will, as expected, downshift the size of its interest rate hikes when it meets next week. But there’s danger lurking, some warn. If the Fed backs off monetary tightening too soon, inflation could again climb, this time on the back of a still-tight labor market. And inflation’s bite remains evident despite its decline: just look at soaring American credit card debt and automobile repossessions. In Europe, the outlook is worse. Inflation and Russia’s war on Ukraine have left the euro zone teetering near recession, with labor strikes from France to Germany to Italy another indicator that workers are in crisis. In the US, John Authers contends that even with all the good news, a hard or soft landing is hard to predict. “The data now look better for soft,” he writes in Bloomberg Opinion. But “the gut-check remains braced for hard.”

Germany pledged to send more than 100 Leopard 2 battle tanks to Ukraine after Chancellor Olaf Scholz’s apparent foot-dragging caused tensions with the US. As Russia is said to plan a new offensive, the US also reversed its earlier hesitation to send Kyiv some of its tanks as well. The Biden administration also has confronted China’s government with evidence that allegedly suggests some state-owned companies may be providing assistance to Vladimir Putin for his war.