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Median views expect growth to slow into mid-1990; alternative views stress capacity constraints or demand resilience, each linking inflation outcomes to wage-cost pressures, interest rates, and sectoral weakness in autos, employment, and housing.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/economic-commentary-inflation-and-soft-landing-prospects/324133/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/economic-commentary-inflation-and-soft-landing-prospects/324133.png","ImageObject",300,407,{"name":92,"@type":93},"Theodore","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-29","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",11,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What does the Roundtable mean by a “soft landing” through 1990?","Question",{"text":113,"@type":114},"It refers to economic growth slowing to below potential into mid-1990 while inflation rises less rapidly than its recent pace.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What factors are cited as underpinnings of weaker demand?",{"text":118,"@type":114},"Weakening demand is especially noted for consumer durable goods and residential construction, along with a curtailed pace of exports and investment spending.",{"name":120,"@type":111,"acceptedAnswer":121},"How do the forecasts describe inflation behavior across 1989 to 1990?",{"text":122,"@type":114},"Most forecasters expect limited relief; the median projects the GNP implicit price deflator increasing at about a 4.5% to 5.0% annual rate from 1989 Q2 through 1990 Q3, then easing only insignificantly.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},324133,1790131604,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},7971461740886,"https://ap-avatar.wpscdn.com/davatar_3d24733baf745e90a7e4bdd5f77d97b2","by John J.Erceg  \nTe US economy has ben growingsteadily since late 1982 in what has be-come the longest peacetime expansionon record.  \nThe consensus forecast of a group ofeconomists who met recently at theFederal Reserve Bank of Cleveland isthat the expansion will continue at leastthrough 1990,but at a pace slow enoughto prevent a further growth of inflation.  \nThe economists met on June 2 at thespring meeting of the Fourth FederalReserve District Economists'Round-table.This Economic Commentary dis-cusses their forecasts for the economyand for inflation.  \nWe should note before beginning our dis-cussion that even if the consensus fore-cast of slower growth were achieved,theinflation rate expected by the economistsby the end of 1990 will still be greaterthan the average annual rate thatprevailed between 1983 and 1987.  \n## ■ Economic Prospects\n\nA number of alternative views ofeconomic growth,each with somewhatdifferent implications for inflation,sur-faced at the Roundtable meeting.Themedian forecast of the 27 participantsindicates that they expect a“soft land-ing,\"that is,growth of the economywill slow to a rate below its potentialoutput into mid-1990,and inflationwill rise a little less rapidly than itsnealy 5%annual rate since early 1988.  \n# Inflation and Soft Landing Prospects\n\nAccording to this view,real GNP willincrease at an average annual rate of 1.5percent between 1989 second quarterand 1990 second quarter,and then willincrease at about a 2.8 percent annualrate in the second half of 1990(seetable 1).Underlying this projectedslower growth rate is weakeningdemand,especially for consumerdurable goods and residential construc-tion,and a curtailed pace for exportsand investment spending,the two sec-tors that led the accelerated pace ofgrowth in the economy in 1987 and1988.The consensus forecast points tovisible slowdowns in new car sales,employment growth,and housing as in-dications that output growthis slowing.  \nAn altemative minority view amongRoundtable participants is that thegrowth of the economy has slowed be-cause output has been constrained bycapacity limits in some parts of theeconomy.According to this view,thereis sufficient strength of demand in mostsectors of the economy,except for con-sumer spending and residential con-struction,to sustain growth of realGNP that will grow at about a 2.5 per-cent average annual rate at leastthrough the end of 1990.At the time ofthe June 2 meeting,neither the rise ininterest rates nor the increases in theforeign exchange value of the dollarwas thought to be strong enough toslow the growth of demand.Conse-quently,Roundtable participants wththis view expect that upward pressureson wages and prices will continue.  \nJuly 1,1989  \nA consensus forecast by 27economists who met recently at theFederal Reserve Bank of Clevelandcalls for continued slow growth inoutput and a\"soft landing\"for theeconomy through 1990.However,their projected inflation rate is rela-tively intractable and prospects forlower inflation in the near future donot appear promising.  \nOne Roundtable economist felt that a  \n2.5 percent growth rate for 1989-90 isconsistent with moderate inflation.Ac-cording to his view,interest rates andinflation have peaked.Primary sourcesof sustained growth over the nextseven quarters will be capital spendingand exports.Capita spending is ex-pected to increase 5 percent to 6 per-cent from 1988 because yields on long-term bonds have not moved up enoughto cause a cutback in capital spending.He also believes that the U.S.tradebalance will continue to improve untilearly 1990 when effects of dollar ap-preciation will slow or end the improve-ment.For the first time in this expan-sion,capital stock should increasefaster than nonfarm output and thusrelieve some of the upward pressureson resource utilization and prices.  \nA few of the forecasters expect a reces-sion that will be mild and that will lasttwo to three quarters,much like themild recessions in 1960-6l and 1969-70  \nGNP in constant(1","cbCaioZxtvxNqNnq","https://ap.wps.com/l/cbCaioZxtvxNqNnq","pdf",1053597,"English","# Economic Prospects\n## Inflation and Soft Landing Prospects\n## Inflation Outlook","[{\"question\":\"What does the Roundtable mean by a “soft landing” through 1990?\",\"answer\":\"It refers to economic growth slowing to below potential into mid-1990 while inflation rises less rapidly than its recent pace.\"},{\"question\":\"What factors are cited as underpinnings of weaker demand?\",\"answer\":\"Weakening demand is especially noted for consumer durable goods and residential construction, along with a curtailed pace of exports and investment spending.\"},{\"question\":\"How do the forecasts describe inflation behavior across 1989 to 1990?\",\"answer\":\"Most forecasters expect limited relief; the median projects the GNP implicit price deflator increasing at about a 4.5% to 5.0% annual rate from 1989 Q2 through 1990 Q3, then easing only insignificantly.\"}]","Economic Commentary - Inflation and Soft Landing Prospects | PDF",1789967114,13]