sooner than expected?
July 1, 2020

The minutes from the Federal Reserve's June meeting provide what's been described as "sobering" look at the future of the United States economy, especially since coronavirus infections have increased significantly in the weeks after it took place.

The minutes reveal the participants expressed concerns about a variety of scenarios coming to fruition and suggested "highly accommodative monetary policy and sustained support from fiscal policy" would likely be needed to "facilitate a durable recovery in labor market conditions."

Such caution isn't surprising. Chair Jerome Powell has been vocal about the state of economic uncertainty, but the minutes also show the Fed "judged that a more pessimistic projection was no less plausible than the baseline forecast." In that scenario "a second wave of the coronavirus" would lead to another stoppage of economic activity "later in the year, leading to a decrease in real GDP, a jump in the unemployment rate, and renewed downward pressure on inflation next year."

What the minutes don't appear to anticipate is that several states would be rolling back some re-opening plans prompting a second round of temporary layoffs just three weeks later. There hasn't yet been a shutdown at the same scale as those in some states earlier this year, and some places like New York seem to still be on the right path, but the new surge in cases has come sooner than the Fed expected. Read the full minutes here, as well as more coverage at The Washington Post. Tim O'Donnell

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