Market Minutes Audiocast: Explaining a soft landing for the U.S. economy
SPEAKER 1: Welcome to Market Minutes, an audio cast to help you stay informed on key topics likely to impact markets, the economy, and investors. Today's topic is explaining a soft landing for the US economy. Here is chief investment officer, Eric Freedman. 
ERIC FREEDMAN: The principle question is the whole definition of soft landing, I think it's an important phrase for listeners. And it's almost this concept that the economy can recalibrate, can find an equilibrium of perhaps a little less consumer demand without a massive departure of consumer demand. 
And the same thing for business spend, a slowdown in business spend but not a complete departure of business spend. And that's really more on the demand side of the equation. The supply side of the equation is much more challenging for policymakers to control. 
And the war in Ukraine has certainly put a set of challenges in front of policymakers. For example, in Europe right now, they're anticipating rationing of energy, setting thermostats in the wintertime no warmer than x, and in the summertime no cooler than y. 
So those are variables that really reflect the anticipation, if you will, of what's in store, just given again some of the supply constraints of getting natural gas and other energy feedstocks into consumers and businesses. 
So that's not easily legislated. And that tends to be more of a reactive environment in which companies and consumers are faced with. And so not all that is explained by challenges in Ukraine. 
Also reflects some of the supply constraints out of China, given massive lockdowns and also is a function of a labor force, which is not fully back at work. Labor force participation is about 1% or 2% lower than its prepandemic level. It's also well off its trend before the pandemic. 
And even though a couple of percentage points may not sound like a lot, anywhere that consumers go, whether it's airports, restaurants, you look at what we're seeing in the public sector in terms of services like utilities and the great work that fire people and police people do to provide services, there's really a lack of throughput, if you will, on workers and employment, which has been another impact of the supply constraints. 
So that soft landing, and I think it's a great point, is can we match up supply and demand in a way that is not too aggravating for the economy? And like most things, there are belief systems across the spectrum. Some think that that's, I guess to use a gymnastics analogy, that the policymakers can stick the landing. 
Others think there would maybe be a footfall fall. Others think there may be actually a fall. And we think that there's likely to be at least a foot fall on that soft landing, if you will. And that's why we have a little bit of more of a cautious outlook than we normally might with respect to the fore path for investors. 
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