Bloomberg Surveillance: Wide Runway for Soft Landing

Neil Dutta, Renaissance Macro Head of Economics, says the Fed is following a "rules-based framework" around inflation and expects the economy to continue top grow . Elyse Ausenbaugh, J.P. Morgan Private Bank Global Investment Strategist, reacts to the ECB decision. Sree Kochugovindan, Abrdn Senior Research Economist, says she sees the possibility of a start of a technical recession in the UK and expects recession-like conditions to persist. Stephanie Roth, Wolfe Research Chief Economist, says the runway is wider for a soft landing in the US. Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full Transcript: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app. This is a joy. Yesterday was humbling ability for everyone, no question about that, and today well accept But today a recalibration year of where we go in our optimism on the American experiment. A few have been right, nobody like Neil duddat how to Economics at Renaissance Macro over the last eighteen months an absolute tewort of force that America economic might will prevail. This morning, David Rosenberg writes of a tepidominal GDP. At the same time, the tech analyst Dan ives Hit Webbush and Joel Fish buying it truest go out two in three years. I'm technical excellence of the Magnificent seven. Can our technology lead continue the dota optimism on American economy? That's a tough question, Tom, I mean, I hope so. I mean, productivity is notoriously difficult to forecast. But if productivity is picking up, which it has been over the last couple of quarters, then it raises the you know, the capacity for the economy grow without stoking inflation, and that takes a lot of pressure off the Fed. The last few months, you've been absolutely locked in. You seem to have some kind of visibility on what's happening here that some of the people are lacking. What's helping you. What's the framework that you're using to see things a little bit more clearly over the last few months. Well, I mean you had mentioned earlier that you know, Powell uh sounded some sounded different a couple of weeks ago. I mean, but you know, to me, the die has been cast for this for for a little bit of time now, I mean, and that's because inflation is slowing more rapidly than they expect. I mean, I think the Fed is following essentially a rules based framework where they're taking changes in inflation and the unemployment rate and translating that into expectations around the federal funds rate. And that's basically what's happening. That's what they did yesterday. And so you know, core inflation in November is likely to come in barely one tenth of one percent month over month, and that means that the momentum going into twenty twenty four is quite weak. And so if they're revising down inflation in December, which they did, and then a few months later they're going to be revising down inflation again in March, what do you expect expect them to do? What I would push back on, John, is this notion that this is because I mean, you know, you see all this already. Oh the ten years broken below four percent, that means a recession is happening. No, that's not what this is about. This is about inflation coming in better and the adjusting as a result, and that's ultimately a good thing. And you know, I think it's going to, you know, give the economy it a chance to continue growing. And I think that's that's what's likely. Well gets you around look on growth in just a moment. Policymakers like to use the word if just to hedge themselves if this continues, we might do this. You don't think that if is that large? You think this is already kind of baked in these right cuts are coming. Well, I don't know that it'll be six because to me, six feels like, you know, if there's a recession, six wouldn't be enough, but if the economy is growing, six feels like too many. Frankly, but I do. I don't think it's much of an if about round inflation. I mean, Powell talked earlier this year about a disinflationary process, and I think that was a little bit premature to talk about it. But now it really does feel like a meaningful disinflationary process is underway, and we have continued moderation in housing rental inflation coming. You know, the Terminal has an article today about Manhattan rants going down year over year. We also know that used car prices will continue to deflate over the next several months, and that was actually it popped in November. So and between that and you know, core goods excluding cars, I mean there's continued downside there as well, so I do. And the labor markets