I think that past experience does mean that we should tend to regard a hard landing as the default most likely outcome.
Absent other evidence, when the Fed hikes this much, we should expect one.
After the latest unemployment numbers, Sahm wrote this piece, which is worth reading in full. This is her important health warning:
"Indicators of economic downturns like the Sahm rule are empirical regularities from the past, not laws of nature. The pandemic was extremely disruptive, and the rebalancing of the economy has been messy and slow. That’s as true for inflation and supply chains as it is for the labor market."
This week’s data has almost all been consistent with a narrative of slowing inflation, but also slowing growth.
Fed is now signaling that it will try to avoid a recession. Its latest “dot plot” didn’t predict 2% inflation until 2026, suggesting a long time to make the last step down to the target. Blitz suggests their runway is this long “precisely because they fear recession.”
John Authers Bloomberg 17 November 2023
The Fed could adopt a policy of strategic hypocrisy, insisting that its target hasn’t changed while in practice allowing inflation close to 3 percent for several years; then, once it has become clear that such a policy won’t allow runaway inflation, finally change the formal target.
Paul Krugman New York Times 22 August 2023