Soft Landing Fantasies

Those who think the wizards at the Fed have engineered a soft landing for the grotesquely pumped U.S. economy are in for a rude awakening. Strip out the “wealth effect” from mega-cap stocks driven mostly by hot air and short covering, and the economy is already in recessionary muck. Although yacht sales reportedly are still brisk and nearly every American has booked an exotic cruise, retail sales to the broad middle class have slipped so badly that even lowly Dollar Tree is struggling for air. Consumer confidence has begun to fall because wages are again losing ground to inflation. A look ahead is even more dispiriting with AI breathing down everyone’s neck, since it is potentially the biggest job-killer the global economy has ever faced.  While work-saving innovations may have created more jobs than they’ve destroyed, it’s difficult to imagine how that will happen in an era where the machines themselves are capable of rooting out inefficiency more ruthlessly than any human could.

Tesla as Savior

So what would a soft landing imagined by Wall Street look like?  It would probably start with a 10%-15% selloff in stocks– not quite a statistical bear market, just enough to allow investors to do some bargain-hunting ahead of the next big run-up.  Car manufacturers would sink into genuine recession, but it would be cushioned by Tesla’s unique ability to ride out the storm with fabulous high-tech innovations yet to be imagined. Tesla shares have already fallen nearly 60% from their 2021 highs just above $400, so the worst, we’ll be told, may be past. The Street’s spinmeisters would also be fixated on the prospect of lower fuel prices, lower inflation and lower interest rates. The mainstream media, too stupid and lazy to deviate from the popular narrative, would give these fantasies a boost with headlines that see the bright side of, in this case, a slide into the deepest economic morass since 1973-74.