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When you hear the term soft landing in economic discussions, it’s often accompanied by a wave of optimism from the Federal Reserve and financial pundits. But history tells us to brace for something far worse. A soft landing refers to the Federal Reserve successfully reducing inflation without triggering a severe recession, but as we’ve seen in the past, these promises often lead to disappointment.

In fact, since the 1980s, only one soft landing has been achieved, in the mid-1990s. Compare that to the numerous recessions that followed other attempts. When debt from years of easy money policies piles up, the belief that this time will be different borders on insanity. Our current economic situation shares striking similarities with past downturns, and the signs all point to another recession looming on the horizon.

The Fed’s Rate Cuts: A Familiar Precursor to Recession

The video transcript provides a stark reminder of the dangerous pattern we’ve seen play out time and time again. The Federal Reserve begins lowering interest rates, typically to combat declining economic activity or rising unemployment, and soon after, a recession strikes. In today’s economy, we’re seeing those same early warning signs. The Fed has already begun cutting rates, not because inflation has been truly beaten, but because employment and other economic indicators are beginning to lag.

What’s worrying is that employment, a critical measure of economic health, is often a lagging indicator. Unemployment may not peak until 18 months after policies are put into place, meaning the worst could be yet to come. The number of layoffs is growing, job creation is stalling, and people’s hours are being cut. The Federal Reserve knows that things are getting worse, yet continues to offer the public a narrative that suggests everything is under control.

Inflation Isn’t Done With Us Yet

Despite claims that inflation is under control, everyday Americans know better. Prices may not be skyrocketing as quickly as before, but inflation hasn’t stopped—it’s only slowed. This temporary relief will likely be short-lived. History tells us that inflation can come roaring back, particularly if the Federal Reserve resumes its usual playbook of cutting interest rates too soon. With each rate cut, the likelihood of inflation climbing higher grows. This places more pressure on the average household and especially retirees who are already struggling with the erosion of their purchasing power.

For example, retirees in 2008 lost nearly half of their retirement savings during the financial crisis, and with today’s inflation and rising cost of living, they stand to lose even more in the next downturn. The last four years alone have seen a 25% loss in purchasing power, and that war on the dollar continues to this day.

False Sense of Security from High-Yield Accounts

In response to the inflationary environment, many Americans have turned to high-yield savings accounts or Certificates of Deposit (CDs) to offset some of their financial losses. These accounts have become increasingly popular as interest rates rise, but here’s the harsh reality: these rates won’t last. Major banks like JP Morgan Chase and U.S. Bank are already calling back their high-yield CDs before they mature, and this trend is spreading. As interest rates drop again, banks will stop paying out these generous returns and revert to paying little or no interest on savings.

The problem? Many people have gotten used to factoring this extra income into their budgets. But when it disappears, combined with rising inflation, people’s savings will be worth even less than they are today. This creates a dangerous scenario for those on fixed incomes, such as retirees, who rely on savings to supplement their monthly expenses.

A Soft Landing Is Unlikely—Prepare for the Worst

So, what are the chances of a soft landing? The truth is, it’s incredibly difficult to achieve. The term “soft landing” was originally coined in the context of aviation and space exploration, where a controlled, gentle landing on a foreign surface was the goal. However, these missions have notoriously high failure rates, and successfully landing on the moon or another planet remains one of the hardest tasks in space travel.

The same can be said of the Federal Reserve’s attempts to manage the economy. With so many factors—rising unemployment, declining savings rates, and increasing inflation—the likelihood of pulling off a smooth economic landing seems slim. And when you consider the past, where soft landing optimism often precedes economic collapse, the current climate should make you wary.

What Can You Do to Protect Yourself?

If you’re someone nearing retirement or already retired, it’s crucial to acknowledge that a soft landing is not in our future. The US dollar is likely to continue its decline in value, and your wealth could be eroded further if you don’t take proactive measures.

At ITM Trading, we’ve seen firsthand how people who take action today are in a far better position to weather what’s coming. Don’t wait until it’s too late. Education is essential, but action is what will actually protect you and your loved ones in the days ahead.

If you’re not sure where to start or want expert advice on safeguarding your wealth with tangible assets like gold and silver, our team is here to help. Click here to schedule a free strategy call, or call us at 866-351-4219. We can help you build a resilient portfolio that withstands economic uncertainty and ensures your financial security in the years to come.