Fed’s final message before November election: moderation

The Federal Reserve meeting that concluded Wednesday was the last before the November election. So we can assume the audience for the Fed’s economic messaging was consumers, workers, business-owners and investors — who are also voters. 

Voters who, in the past nine months of pandemic chaos, have been through a massive economic shutdown, followed by a rapid but very uneven recovery. 

Here’s the Fed’s main message heading into the fall and the 2020 election: The central bank will keep interest rates near zero and tolerate higher inflation to keep the recovery going and drive unemployment down. 

“They’ve really improved their outlook,” said Thomas Hogan, senior research fellow at the American Institute for Economic Research. He says the economy is improving faster than the Fed predicted.

That’s likely to resonate for mid-to-high-earning professionals, whose jobs and incomes have largely recovered. 

But, if you’re one of the 20 to 30 million Americans who’ve lost a job or income in a struggling service industry, that message may not land well. 

John Leer, an economist at Morning Consult, has surveyed workers living on unemployment benefits.

“We see that 50% of respondents, they’re not receiving enough to cover their basic expenses,” he said.

They’re now getting about a third of what they did before federal pandemic benefits ran out in late July. 

Fed officials have urged Congress to approve more stimulus spending to keep the recovery going.

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