The U.S. economy is heading for a soft landing

Powell mentioned in his speech that monetary policy will only respond to employment falling below its peak level in the future, rather than to employment deviating from this level. This means that monetary policy does not simply tighten in response to unemployment or falling unemployment unless there are signs of an unwanted rise in inflation or other crisis conditions.

At present, Powell believes that the current supply side has been cleared and the economic situation is clear, but the more money and goods are created, the velocity of money circulation needs to remain constant;

The market initially expected a recession, but in fact the economy not only has two states: prosperity and recession, but also an intermediate state; the most perfect intermediate state should be a state of low inflation, high growth, and high employment.

Real estate is also returning to activity. U.S. single-family home construction starts hit 1-1/2-year high in November.A sharp rise in mortgage rates has dampened new home construction in recent months. The new home market remains supported by a severe shortage of existing homes available for sale.

The chart below shows Wall Street’s economic outlook for 2024.