Soft Landing

AAA

DEFINITION of 'Soft Landing'

A term used to describe a rate of economic growth high enough to avoid recession, but slow enough to avoid high inflation. A soft landing is typically defined as an economy that has avoided a strong contraction, often made evident by recessionary events, through government intervention by way of fiscal or monetary policies, in many cases.

INVESTOPEDIA EXPLAINS 'Soft Landing'

For example, if the U.S. economy is growing at strong rate, the Fed may try to engineer a soft landing by raising interest rates enough to slow the economy down, while being sure not to slow the growth to the point of economic contraction. During the 1990s many economic pundits considered Alan Greenspan, the former chairman of the Federal Reserve Board, as a master of engineering a soft landing.

RELATED TERMS
  1. Alan Greenspan

    The former chairman of the Board of Governors of the Federal ...
  2. Hard Landing

    An economic state wherein the economy is slowing down sharply ...
  3. Hard Currency

    A currency, usually from a highly industrialized country, that ...
  4. Contraction

    A phase of the business cycle in which the economy as a whole ...
  5. Inflation

    The rate at which the general level of prices for goods and services ...
  6. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
RELATED FAQS
  1. How does wage price spiral impact interest rates?

    A wage-price spiral occurs when wages and prices rise in tandem in a self-perpetuating cycle that exerts inflationary pressure ... Read Full Answer >>
  2. Who controls the Federal Reserve Bank?

    The Federal Reserve Bank was created by an act of the U.S. Congress in 1913, but the executive and legislative branches do ... Read Full Answer >>
  3. What austerity measures can a country implement to curtail government spending?

    Broadly speaking, there are three types of austerity measures. The first is focused on revenue generation (higher taxes), ... Read Full Answer >>
  4. What is the purpose of the Volcker Rule?

    The Volcker rule limits two main types of activities by large institutional banks. Banks are prohibited from engaging in ... Read Full Answer >>
  5. What can governments do to stop or slow a wage price spiral?

    A wage-price spiral is an economic cycle in which rising wages increase consumer demand, causing prices to rise. Rising prices ... Read Full Answer >>
  6. How do I calculate a modified duration using Matlab?

    The modified duration gauges the sensitivity of the fixed income securities to changes in interest rates. To calculate the ... Read Full Answer >>
Related Articles
  1. Economics

    The Federal Reserve

    Few organizations can move the market like the Federal Reserve. As an investor, it's important to understand exactly what the Fed does and how it influences the economy.
  2. Bonds & Fixed Income

    Tips For Recession-Proofing Your Portfolio

    Find out what to do when the sun sets on a burgeoning market.
  3. Active Trading Fundamentals

    Recession: What Does It Mean To Investors?

    Understanding the business cycle and your own investment style can help you cope with an economic decline.
  4. Economics

    4 Tips For Buying Stocks In A Recession

    Bear markets can terrify even seasoned investors. Learn how to invest safely.
  5. Economics

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  6. Fundamental Analysis

    Explaining the Empirical Rule

    The empirical rule provides a quick estimate of the spread of data in a normal statistical distribution.
  7. Economics

    Explaining Demographics

    Demographics is the study and categorization of people based on factors such as income level, education, gender, race, age, and employment.
  8. Fundamental Analysis

    Calculating Degree of Financial Leverage

    Degree of financial leverage (DFL) is a metric that measures the sensitivity of a company’s operating income due to changes in its capital structure.
  9. Economics

    What Does Capital Intensive Mean?

    Capital intensive refers to a business or industry that requires a substantial amount of money or financial resources to engage in its specific business.
  10. Investing

    What’s Driving Markets Today

    While U.S. stocks managed to eke out modest gains last week, it wasn’t without some violent swings along the way.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!