The Fed at its Open Markets Committee meeting on Wednesday left rates unchanged at near zero. The Fed also assured everyone that it will continue to support the US economy as the pandemic keeps depressing economic growth. Moreover, the Fed made clear that the weak labor market is a high priority in its monetary practices. 

Chairman Powell reiterated that the economy remains weak with few prospects for a turnaround soon. Indeed, Powell stressed that it will take some time for the economy to show real progress. The key to forecasting the economic outlook is the degree to which the government can deal with the Covid19 virus.

Job growth, which looked good in May and June, is not doing so well now. Small businesses, the life blood for jobs growth remains anemic. Importantly, Chairman Powell pointed out that we have to wait for the upcoming statistics, like the employment data, GDP and inflation, to be able to form a good picture. That will not happen for another month or so.

At this point in time there is little optimism about containing the epidemic. Most important is the fact that the administration remains unwilling to impose the proper mitigating measures necessary to successfully beat the virus. And the fact that Trump and his minions are more interested in sniping at its  experts than supporting them is a big problem . There is a lot of talk that a vaccine is about to be made available, but a real vaccine, one that works and is safe is still some way off. There are lots of rumors flying around but nothing concrete has been offered so far. What has also not been talked about is the fact that strong medicine to deal with the pandemic is missing. Until an effective anti-Covid19 drug treatment is available the economy will be  forced to limp along.

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