Nobel economist Paul Krugman says hopes for a soft landing of the US economy are 'still very much alive'

• Nobel economist Paul Krugman said hopes for a soft landing of the economy are 'still very much alive.'
• Krugman was responding to the latest US jobs report and unemployment rate.

Signs of a labor-market cooldown without a rise in unemployment is good news for the US economy, suggesting a mild slowdown in growth still remains a possibility, according to Nobel Prize-winning economist Paul Krugman.

Average monthly job creation in the world's largest economy slowed to 222,000 during the February-April period, from 338,000 for the previous six months, official data show. Still, the unemployment rate came in at a 53-year low of 3.4%.

"The good news is that so far it seems as if we've been getting significant labor market cooling without a rise in unemployment," Krugman tweeted on Wednesday. "Soft landing hopes are still very much alive," he wrote, referring to a scenario that involves a non-disruptive slowing of economic growth.

While the latest trend in the so-called supercore inflation - which excludes energy and housing costs and focuses on those of services – is consistent with the theme of gradual disinflation, it suggests the economy is still somewhat overheated, he added in the Twitter thread.

This week's US inflation report showed price pressures continued to cool in April, which could strengthen the case for the Federal Reserve to pause or end its interest-rate increases.

The Consumer Price Index for April increased 4.9% over the past year, marking the lowest level since May 2021. The reading was slightly below the widely expected level of 5%.

And while inflation has been cooling, it's still above The Federal Reserve's 2% goal. The Fed raised interest rates again by 25 basis points this month, as expected.