With the Fed nearing its inflation target, Wall Street predicts up to six interest rate cuts this year. Renowned Harvard economist Kenneth Rogoff thinks that's a “pipe dream.”

In an interview with Bloomberg, Rogoff said six rate cuts are highly unlikely if the Fed achieves its goal of a “soft landing.”

In Fed lingo, a soft landing is a controlled cooling of the economy that reduces inflation without tipping the economy into a recession. It’s a tricky ordeal, but one that policymakers have pulled off so far.

In Rogoff’s view, the Fed is more likely to cut rates two or three times this year, which is consistent with the central bank’s most recent projections in December.

That being said, the economist said a rate-cut deluge could materialize under one scenario: “If we get a deep recession, definitely it could happen, they will cut rates a lot, not six times, they could cut rates 15 times.”

But the chances of a recession—let alone a “deep recession”—have fallen over the past six months.

According to a December survey from the National Association for Business Economics, 76% of economists believe the odds of a 2024 recession are 50% or less. Major banks like Bank of America and Goldman Sachs place the recession odds at 40% and 15%, respectively.

While experts have poured cold water on the probability of recession, the U.S. economy isn’t exactly in great shape. In fact, 2024 is expected to be a dismal year for growth.

When does a soft landing become hard?

Slowing growth is par for the course for the Fed, but there’s always a risk that a soft landing becomes a hard landing.

“Every hard landing starts with a soft landing,” said Ron Kruszewski, CEO of Stifel Financial, a full-service brokerage and investment firm.

Right now, things are set up for the Fed and economy to succeed, but “there are so many variables that we don’t know. And mostly, geopolitical,” he said.

When looking at leading economic projections, the U.S. economy doesn’t have a lot of margin for error.

An October forecast by the International Monetary Fund has the U.S. economy growing by a meager 1.5% this year, which is well below the 2.1% growth pace of the past two years.

A January report by the Conference Board sees the U.S. economy maintaining a decent growth pace at the start of the year before slowing to a crawl in the back half of 2024.

Year-over-year GDP growth is forecast to slow to 0.5% in the third quarter and 0.3% in the fourth quarter.

Then there’s the S&P Global U.S. Composite PMI, which measures the performance of the manufacturing and services industries. For the past five months, this indicator has remained just above the cut-off point between expansion and contraction.

It was 50.9 in December, suggesting the U.S. economy is barely scraping by.

Another source of concern: the labor market

Some economists have pointed to a seemingly healthy labor market as a reason to be optimistic that the economy will avoid recession. While job numbers appear healthy on the surface, a deeper dive reveals several issues with America’s job engine.

As Creditnews reported, the Labor Department continually revises its employment numbers.

For example, November and December job numbers were revised by a combined 71,000. And in the two months before that, the government erased 101,000 of the originally reported job gains.

Not only that, part-time employment and multiple job holders are making the labor market appear stronger than it really is. According to Charles Schwab, December saw the biggest drop in full-time employment since the start of the pandemic.

“Amid some ongoing hiring difficulties, but decelerating job growth, trying to assess a clear labor market narrative continues to be a challenge,” wrote Charles Schwab analysts Liz An Sonders and Kevon Gordon.