Hard landing (economics)

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A hard landing in the business cycle is an economy rapidly shifting from growth to slow-growth to flat as it approaches a recession, usually caused by government attempts to slow down inflation.[1] It is distinguished from a soft landing, in which an economy's growth rate slows enough to control inflation, but remains high enough to avoid recession. [2] The criteria for distinguishing between a hard and soft landing are numerous and subjective.

The terms hard and soft landing can also be used to describe market price or value decreases, with a soft, slow and controlled decrease generally considered more desirable than a hard, rapid and unpredictable crash in value.

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.[3]

[edit] See also

[edit] References

  1. ^ Hard Landing, investopedia.com
  2. ^ Soft Landing, investopedia.com
  3. ^ Whither Goldilocks?, The Big Picture, September 22, 2006 | Sources: Business Outlook Survey, Federal Reserve Bank of Philadelphia September 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