Economists Ed Hyman is backing away from his call for a hard landing, though he still sees the potential for a recession ahead. Earlier, the chairman of Evercore ISI and the head of the firm’s economic research group were looking for a 2% decline in real gross domestic product in the fourth quarter, which could indicate a broader contraction. However, he has now raised his call for 1% growth at the pace he saw in the first two quarters of 2025, before the economy accelerated to 2% and 3% in the following two quarters. Hyman has some doubts. “History and experience dictate sticking to a hard bearish outlook,” he said in a client note on Thursday. “But the hard math that our team is looking at says that translates into a soft landing outlook. And we do.” The case for a soft landing stems from many factors: low levels of layoffs, high liquidity, record household net worth, slowing inflation, resilient consumers, expectations for low interest rates, and advances in artificial intelligence, among them. The Atlanta Federal Reserve is tracking real GDP growth of 2.5% in the third quarter. “In our view, the arguments for a hard landing remain compelling,” Hyman wrote. “But we retreat to fight another day.” Those hard-hitting arguments got a little more ammunition this week when Ally Financial reported growing challenges to its consumer credit outlook. “Our borrower is struggling with high inflation and the cost of living, and now we have a recently weakened employment picture,” Ally CFO Russell Hutchinson told investors at a conference in New York. The revelations sent shares of Ally plummeting, down about 15% over the past week. JPMorgan Chase also received bad news at the same conference as the head of JPMorgan Chase advised to moderate expectations for the bank’s net interest income. This sent shares lower, although they have since rebounded. The Federal Reserve reported that household net worth rose by nearly $11 trillion over the past year, although it noted that consumer and business debt levels also accelerated. Hyman also noted that the Fed’s tighter policy helped lower bond yields along with commodity prices, signaling a slowing economy. “So this flip may be wrong,” Hyman wrote. “But all things considered, it’s probably the right thing to do. Stay tuned.”
