Soft landing

A soft landing in the business cycle is the process of an economy shifting from growth to slow-growth to potentially flat, as it approaches but avoids a recession. It is usually caused by government attempts to slow down inflation. [ [http://www.investopedia.com/terms/s/softlanding.asp Soft Landing] , investopedia.com] The criteria for distinguishing between a "hard" and "soft" landing are numerous and subjective.

The term was adapted to economics from its origins in the early days of flight, when it historically was the method of the landing of hot air balloons, by gradually reducing their buoyancy. It later also applied to aviation, gliders and spacecraft, as in the Lunar lander.

In the United States, modern recessions and hard and soft landings follow from Federal Reserve tightening cycles, in which the Federal funds rate is increased over several consecutive moves. In modern times, the most notable, and possibly the only true soft landing in the most recent 16 business cycles occurred in the soft landing of 1994, engineered by Federal Reserve Chairman Alan Greenspan through fine tuning of interest rates and the money supply. [http://bigpicture.typepad.com/comments/2006/09/whither_goldilo.html Whither Goldilocks?] , The Big Picture, September 22, 2006 | Sources:Business Outlook Survey, Federal Reserve Bank of PhiladelphiaSeptember 2006, http://www.phil.frb.org/files/bos/bos0906.html | U.S. LEADING ECONOMIC INDICATORS, The Conference Board U.S. Business Cycle Indicators, AUGUST 2006, http://www.econbrowser.com/archives/2006/09/can_it_be_that.html]

In addition to being a certain type of business cycle, a soft landing may also refer to a market segment or industry sector that is expected to slow down, but to not crash, while the wider economy may not experience such a slow down at that time. For example, a contemporary newspaper headline read: "Soft landing forecast for house prices as rate hikes stem growth" [Business Report, South Africa 1 Feb 2007] .

As it stands, these forecasts have very little scientific value and there is not one single verifiable instance of a soft landing following an economic bubble. Similar claims were made repeatedly by vested interests (VIs) about the prospects for the housing market in The U.S. but there is now an almost unanimous consensus that the United States housing bubble is undergoing a significant market crash.

ee also

* Hard landing (economics)
* Recession
* Business cycle

References


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Look at other dictionaries:

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  • soft landing — soft landings N COUNT In economics, a soft landing is a situation in which the economy stops growing but this does not produce a recession …   English dictionary

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  • soft landing — A term describing a growth rate high enough to keep the economy out of recession, but also slow enough to prevent high inflation and interest rates. Bloomberg Financial Dictionary * * * soft landing soft landing ➔ landing * * * soft landing UK US …   Financial and business terms

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  • soft landing — UK / US noun [countable] Word forms soft landing : singular soft landing plural soft landings 1) the process by which a plane or a space vehicle comes down to the ground in a gentle and safe way 2) a good or easy solution to a political or… …   English dictionary

  • Soft Landing — A term used to describe a rate of economic growth high enough to avoid recession, but slow enough to avoid high inflation. When the economy is growing at strong rate, the Fed will try to engineer a soft landing by raising interest rates enough to …   Investment dictionary

  • soft landing — soft lan·ding loc.s.m.inv. ES ingl. {{wmetafile0}} TS astronaut. → atterraggio morbido {{line}} {{/line}} DATA: sec. XX. ETIMO: comp. di soft soffice, morbido e landing atterraggio …   Dizionario italiano

  • soft landing — soft′ land′ing n. ars a landing by a spacecraft on a planetary body that is performed slowly, without a jarring impact • Etymology: 1960–65 …   From formal English to slang


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