Soft Landing.

In plain English

A soft landing is the goal a central bank aims for when it raises interest rates to cool inflation: slow price growth back to a healthy level while keeping the economy growing and unemployment low. The hard part is that raising rates slows borrowing and spending, and pushing too far can cause a recession instead. A recession with rising unemployment is sometimes called a hard landing. A soft landing means the central bank threads the needle and avoids that.

01Why it matters

Whether the Fed pulls off a soft landing affects your job security, your borrowing costs, and your investments, because the alternative is usually a recession with rising layoffs.

02The math, step by step

Picture inflation running hot, so the central bank raises rates over a year or two. If prices ease back toward target while the unemployment rate stays low and growth continues, that is a soft landing. If unemployment spikes and output shrinks instead, that is a hard landing.

03What this is NOT

04Receipts

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