The Goldilocks economy: no more than a fairytale

Many experts believe in the Goldilocks scenario - the hoped-for soft landing of the US economy. But with a hard landing - or even a recession - looking more likely, it may only be the bears which turn out to be real.

As adults, we don't believe in Santa Claus but, strange to say, a large number of adults such as central bankers, economists and financial experts seem to believe in Goldilocks, the popular name given to the hoped for, soft landing of the US economy not too hot, not too cold!

The history of investment markets is that they swing from one extreme to another. Markets become too dear, then eventually fail and continue to fail until they become too cheap. Markets that have become too cheap after time become attractive and are bought and bought until they become too dear again, and so it goes on. Economies also go from boom to bust and back again. The Goldilocks concept however, asks us to believe that an economy or a market can go from being too dear or too cheap to being just right not too dear, not too cheap and stay there. That is the soft landing they talk about.

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