A downturn is coming. Will the landing be soft or hard?

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news all eyes are on whether the global economy is heading for a hard or soft landing.</p><p>In a closely watched <a href="https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm" target="_blank"><strong>speech</strong></a> yesterday, Fed boss Powell said the US Federal may scale back the pace of its interest rate hikes in December. "<i>It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting</i>". However, Powell added that the "terminal rate," is likely to be "somewhat higher" than the 4.6% indicated by in their September projections.</p><p>Markets are now sure the December 15 (NZT) rate change will now be +50 bps, rather than the 75 bps previously assumed. Their higher end point will probably keep pressure on the RBNZ to stay ahead of them.</p><p>Layoffs in the tech sector are starting to mount, and this has pushed the <a href="https://www.challengergray.com/blog/november-2022-job-cuts-soar-127-as-tech-drains-jobs-highest-monthly-total-since-jan-2021/" target="_blank"><strong>layoff data</strong></a> to nearly a two year high. Still, in the grand scheme, the numbers at 77,000 are really very low still.</p><p><a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20222253.pdf" target="_blank"><strong>US jobless claims</strong></a> came in lower than expected at just under 200,000 taking the total on these benefits to 1.26 mln and still +0.9% of their workforce. It was surprising that this labour market data didn't rise given the anecdotal job layoff reporting.</p><p>Analysts are still expecting payrolls to have grown just +200,000 in November, which will be the lowe