Economists now predict the U.S. is heading for a "soft landing." Here's what that means.

With inflation cooling and hiring remaining strong, economists are now venturing that something other than a recession may be around the corner: a so-called soft landing.

That's a quite a turnabout from earlier this year. Economists in February were were predicting that the U.S. was about to tumble into a recession — thanks to the Federal Reserve's 11 interest rate hikes since early 2022 and signs that inflation-weary businesses and consumers might be pulling back from spending. 

Yet so far, the economy has continued to plow ahead, and inflation is retreating faster than some economists expected. Some types of products are even seeing deflation, or a decline in prices compared with a year ago. The Federal Reserve sounded cautiously optimistic on Wednesday, with Chair Jerome Powell saying he was "pleased with the progress" in the battle against inflation and the Fed's goal of keeping full employment.