The Fed has been talking about having their goal be a “soft landing ”for the economy –meaning avoid a recession and manage inflation as GDP comes down all while keeping the job market relatively stable. But as of last Friday ,when Fed Chairman Powell spoke at Jackson Hole it was clear that the new priority is to tackle inflation at the expense of a “soft landing”. Commentators are now keen to point out that this Fed does not want to go down in history as the one that let inflation run away. Part of this shift is most likely Powell trying to save face after repeatedly stating that inflation was “transitory” and would come down much sooner than is playing out. Although we have seen two consecutive quarters of GDP contraction, it is difficult to call what is going on a recession. The labor market is still very healthy. However, what economists are predicting going forward is known as a “growth recession”. This is where GDP does not go negative, but growth is very anemic and unemployment creeps higher. Investors fear this scenario because it is a slow drip of prolonged pain, thus the sell off on Friday and the days to follow. A short actual recession is preferred to that, but a “soft landing” as we sustained in 1994-95 when interest rates doubled and unemployment never rose is still not out of the question. The difference this time is that inflation is much higher than it was then and might prove more tricky to tackle. But even that points to the silver lining of this current economy. Inflation has been stubborn partly due to the fact that jobs are so strong. There is still a tremendous amount of money going into the hands of the American consumer. Unemployment is at 50-year lows. That makes it hard to drive the economy into a recession when 80% of it is composed of consumer spending. The bottom line is that whether we are in a recession, headed toward a “growth recession”, or experiencing a “soft landing”, stocks still remain the best risk-adjusted asset to be invested in over a multi-year timeframe. Valuations have come down and most S&P sectors look very compelling.