Planet Money – A tarot card reading for the U.S. economy

Intro

In this episode of Planet Money, the team invites a tarot card reader to do a reading for the US economy. They explore different scenarios for the future of inflation and the potential impacts on the economy. Economists weigh in on the possibility of a recession and the Federal Reserve’s role in managing inflation and unemployment. The tarot card reading provides an interesting and unconventional perspective on the economic future.

Main Takeaways

Scenarios for Inflation and the Economy

• Inflation has come down from 9% to 3%, but economists are unsure what comes next.
• The Federal Reserve wants inflation to come down to 2%, but there are different scenarios for how this could happen.
• A “hard landing” scenario could result in a recession and higher unemployment.
• A recession doesn’t necessarily mean a hard landing like in 2008 or 2020.
• Signs of a potential recession include people falling behind on credit card and auto loan payments and companies defaulting.
• Slow job growth is a concern and could lead to higher unemployment, which is a delayed effect of raising interest rates.
• Federal Reserve may continue to raise interest rates to keep inflation down.
• Unemployment and slow job growth are concerns.
• Soft landing scenario is possible where Fed brings down inflation without causing high unemployment or recession.
• Immaculate disinflation has occurred with inflation coming down without negative effects on the economy.
• Inflation expectations determine inflation, making it a self-fulfilling prophecy.
• A soft landing is possible if people believe inflation will come down.
• People’s long-term expectations for inflation are back down to pre-inflation levels.
• There is a possibility of a no-landing scenario where the Fed cannot get inflation down to the 2% target.
• The economy may not experience a hard landing for another two to three years, according to Jason Furman.
• Inflation news can be transitory in both directions, with some good news currently being seen.
• There are drags on inflation that would prevent it from coming down right away, such as fixed prices set by companies and negotiated worker contracts.

Tarot Card Reading for the Economic Future

• Tarot card reader Iiko drew cards for the economic future.
• Cards included a seesaw in balance for no landing and a circle of inflation measures.
• Job growth card was already in Iiko’s deck before the economists gave her their designs.
• Reading predicts a hot mess at the beginning of the year with more unemployment, but growth and opportunities towards the end of the year.
• Four people looked at the cards for the economic future, with one seeing a soft landing, one seeing no landing, and two seeing a hard landing.

Summary

Scenarios for Inflation and the Economy

Inflation has been a topic of concern for economists, with the Federal Reserve aiming to bring it down to 2%. However, there are different scenarios for how this could unfold. A “hard landing” scenario could result in a recession and higher unemployment, similar to the events of 2008 and 2020. Signs of a potential recession include people falling behind on credit card and auto loan payments, as well as companies defaulting. Slow job growth is also a concern, as it could lead to higher unemployment as a delayed effect of raising interest rates. Despite these concerns, there is a possibility of a soft landing where the Federal Reserve successfully brings down inflation without causing significant negative impacts on the economy. People’s long-term expectations for inflation have returned to pre-inflation levels, which could contribute to a soft landing if belief in decreasing inflation persists. However, there is also the possibility of a no-landing scenario where the Federal Reserve struggles to reach the 2% inflation target.

Tarot Card Reading for the Economic Future

The tarot card reading provides an unconventional perspective on the economic future. Tarot card reader Iiko drew cards that symbolize a seesaw in balance for no landing and a circle of inflation measures. The reading predicts a challenging start to the year with more unemployment, but it also suggests growth and opportunities towards the end of the year. Different interpretations of the cards by four individuals result in varying predictions, with one seeing a soft landing, one seeing no landing, and two seeing a hard landing. While the tarot card reading may not provide concrete predictions, it offers an interesting and thought-provoking viewpoint on the economic future.

Conclusion

The future of inflation and the US economy remains uncertain. Economists discuss different scenarios, including a potential recession and the Federal Reserve’s role in managing inflation and unemployment. The tarot card reading adds a unique perspective to the conversation, highlighting the unpredictability and complexity of economic forecasting. Whether a soft landing, no landing, or hard landing occurs, it is essential to monitor inflation, job growth, and the actions of the Federal Reserve to understand the potential impacts on the economy.