After there鈥檚 been a lot of talk about a so-called soft landing, i.e. successfully bringing down inflation towards its target without plunging the economy into recession, the U.S. economy鈥檚 continued strength along with some hotter-than-expected inflation readings has given rise to a new buzzword, the 鈥渘o landing鈥 scenario.
As opposed to a soft landing explained above and a hard landing, which describes bringing down inflation at the cost of a sharp drop-off in economic activity and a significant rise of unemployment, a 鈥渘o landing鈥 scenario describes an outcome where robust economic growth coincides with a failure to bring down inflation despite the Fed鈥檚 or any other central bank鈥檚 efforts to cool it.
According to , which gauges the sentiment of approximately 300 institutional, mutual and hedge fund managers around the world on a monthly basis, such an outcome for the global economy is now considered significantly more likely when looking at the next 12 months than it was at the beginning of the year.
In April, 36 percent of respondents saw a 鈥渘o landing鈥 as the most likely scenario for the next 12 months versus just 7 percent in January. At the same time, the dreaded 鈥渉ard landing鈥 is no longer considered a likely outcome for the vast majority of fund managers amid strong economic readings in the United States and internationally, which have eased recession fears but also dashed hopes of imminent rate cuts from central banks across the globe.
