Blackstone’s Chief Financial Officer, Michael Chae, expressed cautious optimism about the U.S. economy achieving a “soft landing” as inflation appears to be cooling faster than anticipated. Speaking at a Barclays conference, Chae noted that the Federal Reserve’s efforts to curb inflation may avoid triggering a recession. He highlighted that, according to a Blackstone survey conducted in June, only about 14% of CEOs from the firm’s portfolio companies expect a recession in the next 12 months.
Chae emphasized that inflation is decelerating more rapidly than many had forecasted, particularly pointing to the August Consumer Price Index (CPI) rise of 2.5%. However, he noted that this figure does not fully capture the slowing inflation in housing, which is a lagging component of the CPI. Excluding shelter, Chae estimated that year-over-year CPI for August was closer to 1.7%, underscoring the delay in housing inflation’s decline.
While there is debate around the Federal Reserve’s next move—whether to cut rates by 25 or 50 basis points—Chae suggested that the direction of the 10-year Treasury rate holds more significance for investors. He stated that a Treasury rate in the mid- to high-3% range is a positive indicator for capital markets and Blackstone’s business.
Chae’s remarks reflect Blackstone’s broader view that inflation is easing and that economic cooling is progressing without severe disruption, positioning the U.S. economy to potentially achieve the elusive soft landing.
