NRF economist sees U.S. economy headed for soft landing, not recession

NEW YORK — The United States is poised to sidestep a recession, according to Jack Kleinhenz, Chief Economist of the National Retail Federation. With the economy slowing but still growing and inflation under control, the Federal Reserve is preparing to lower interest rates—a move signaling a potential "soft landing" for the nation’s financial landscape.

"The U.S. economy is clearly not in a recession nor is it likely to head into one in the home stretch of 2024," Kleinhenz wrote in NRF’s Monthly Economic Review. Instead, he described a balanced outlook where both economic growth and inflation are easing, a development that economists and policymakers alike have been eager to see.

While August brought worrisome headlines—including rising unemployment and slower manufacturing growth—Kleinhenz noted that more recent data has dispelled immediate fears. "Concerns are now focused on the labor market," he said, but he emphasized that the chances of a full-blown recession are now far less likely than previously feared.

The positive outlook is buoyed by revised second-quarter GDP growth of 3%, alongside consumer spending growth of 2.9%, suggesting that American consumers, who form the backbone of the economy, remain resilient.

Looking ahead, Kleinhenz believes lower interest rates will relieve pressure on households and stimulate sectors like housing and small businesses, setting the stage for steady growth into 2025. With inflation near the Federal Reserve's target and jobs still being added—albeit at a slower rate—Kleinhenz projects cautious optimism for the months to come.

“Consumers will remain savvy,” he concluded, “but these developments should support their propensity to spend.”