Economists Ed Hyman is backing off his call for a hard landing, even though he still sees the potential for a recession ahead. Previously, the chair of Evercore ISI and head of the firm’s economic research team had been looking for real gross domestic product to slip by 2% in the fourth quarter, something that could have portended a broader contraction. However, he has now raised that call to growth of 1%, the same pace he sees for the first two quarters of 2025 before the economy accelerates by 2% and 3% in the following two quarters. Hyman does, though, have some misgivings. “History and experience say to stick with a hard landing outlook,” he said in a client note Thursday. “However, the hard math that our team has reviewed says flip to a soft landing outlook. And that’s what we’re doing.” The case for a soft landing comes from multiple factors: a low level of layoffs, high liquidity, record net household worth, slowing inflation , a resilient consumer, expectations for lower interest rates and the growth of artificial intelligence among them. The Atlanta Federal Reserve is tracking real GDP growth of 2.5% in the third quarter. “In our view, arguments for a hard landing are still persuasive,” Hyman wrote. “But we are retreating to fight another day.” Those hard-landing arguments got a little more ammunition this week when Ally Financial reported increasing challenges to the consumer credit outlook. “Our borrower is struggling with high inflation and cost of living, and now more recently, a weakening employment picture,” Ally CFO Russell Hutchinson told investors at a conference in New York. Those remarks led to a sharp swing lower in Ally shares, which are down about 15% over the past week. A JPMorgan Chase executive also had bad news at the same conference , as he advised tempering expectations for the bank’s net interest income. That, too, led to a swoon in shares, though they have since rebounded. The Federal Reserve reported that household net worth has increased nearly $11 trillion over the past year, though it also noted that consumer and business debt levels also are accelerating. Hyman also noted that tighter Fed policy has helped push down commodity prices as well as bond yields, pointing to a slowing economy. “So this flip could be a mistake,” Hyman wrote. “But all considered, it’s probably the right thing to do. Stay tuned.”
