Federal Reserve Mouthpiece: The U.S. economy is closest to achieving a "soft landing" in history, but no one dares to unbuckle the seatbelt

The Wall Street Journal reporter and known as the “Fed’s mouthpiece,” Nick Timiraos, wrote on February 15 that all key indicators of the U.S. economy are pointing in the same direction: inflation is decreasing, employment remains solid, and growth is steady. This is the closest the U.S. economy has come to achieving a “soft landing” in history. However, he also warned that core PCE remains near 3%, and price pressures driven by tariffs may hinder significant inflation progress this year.
(Background: Analysis: Wall Street is “pricing in a long BTC position,” while foreign investors are reducing their holdings)
(Additional context: Wall Street’s Apollo, managing nearly a trillion dollars, teams up with DeFi lending platform Morpho to acquire 90 million tokens)

Table of Contents

• The closest to a soft landing in history
• No one dares to unbuckle
• Hidden risks in the labor market: “Unemployment more likely to rise”

Four years ago, most economists believed it was impossible for the U.S. to curb inflation without experiencing a recession. Now, in his latest analysis, Nick Timiraos states that what was once considered an “impossible task” is becoming a reality. The U.S. economy has not only avoided a recession but inflation is also steadily falling back toward the Federal Reserve’s 2% target.

The closest to a soft landing in history

Nick Timiraos points out that the three main pillars of the U.S. economy are currently all showing green lights:

Inflation: The latest data released on February 13 shows that the January Consumer Price Index (CPI) increased by 2.4% year-over-year, with core CPI at 2.5%, marking the lowest increase since the surge in prices in 2021.

Employment: Non-farm payrolls added 130,000 jobs in January, far exceeding the market expectation of 55,000, with the unemployment rate dropping to 4.3%.

Economic growth: GDP continues to expand steadily, supported by consumer spending and business investment.

Timiraos emphasizes that such simultaneous strong performance across these indicators is extremely rare and represents the U.S. economy being “the closest in history to achieving a soft landing.” A soft landing refers to successfully controlling inflation without triggering a recession—a goal the Fed has been pursuing for the past two years.

No one dares to unbuckle

Nick Timiraos uses a clever metaphor: “Even if oxygen masks aren’t needed, it’s still too early to unbuckle.”

His first concern is inflation. The Fed’s preferred inflation indicator, the core Personal Consumption Expenditures (PCE) index, is still near 3%, well above the 2% target. More critically, many forecasters believe that as price increases related to tariffs gradually pass through to more consumer sectors, inflation reduction this year may face significant challenges.

Fed Chair Jerome Powell acknowledged at the January 28 press conference that the core PCE reached 3.0% over the 12 months ending in December, with “no net progress” compared to a year earlier. Powell attributes the overshoot mainly to goods prices (related to tariffs) and considers it a “one-time price increase” rather than persistent inflation, though markets remain skeptical.

The Fed currently maintains interest rates between 3.5% and 3.75%. The CME FedWatch tool indicates an approximately 83% chance of rate cuts by June. However, JPMorgan has revised its forecast, now expecting the Fed to hold steady through 2026 without cutting rates.

Hidden risks in the labor market: “Unemployment more likely to rise”

The second risk Timiraos highlights is that the labor market may not be as resilient as the data suggests.

Jeffrey Cleveland, Chief Economist at Payden & Rygel, states plainly:

Objectively, the labor market has been weakening. Unemployment is more likely to rise this year than fall.

Despite the strong January non-farm payrolls (+130,000, well above expectations), a closer look at the structure reveals concerns. Healthcare contributed 82,000 jobs (accounting for 63% of total growth), while federal government layoffs of 34,000 and state government reductions of 18,000 reflect the impact of administrative efficiency reforms (DOGE) on public sector employment.

More notably, CNBC cites Timiraos’ analysis from February 10, suggesting “the labor market will determine the Fed’s next move,” implying that if employment data weaken, the Fed may be forced to cut rates earlier rather than waiting for inflation to fully return to target.

For the crypto market, the core message is that good news and bad news coexist. If the soft landing narrative continues to hold, it could benefit the long-term performance of risk assets; however, if tariff-driven inflation constrains the Fed’s ability to cut rates, Bitcoin and other cryptocurrencies may face short-term liquidity tightening pressures.