Fed officials cited risks if Congress fails to pass more aid

Federal Reserve Board Chairman Jerome Powell testifies during a Senate Banking Committee hearing, Thursday Sept. 24, 2020 on Capitol Hill in Washington about the CARES Act and the economic effects of the coronavirus pandemic. (Drew Angerer/Pool via AP) (2020 Getty Images)

WASHINGTON – Federal Reserve officials expressed concern at their most-recent meeting that the U.S. economy recovery could falter if Congress failed to approve another round of pandemic relief.

The Fed on Wednesday released minutes of its most recent meeting, showing that officials believed the economy was growing faster than expected.

But they based their forecasts of a further steady recovery on expectations that Democrats and Republicans would resolve their differences and provide further economic aid, including expanded unemployment benefits and help for small businesses.

The minutes said that "most forecasters were assuming that an additional pandemic-related fiscal package would be approved this year, and noted that, absent a new package, growth could decelerate at a faster-than-expected pace in the fourth quarter.”

Economists noted the minutes delivered a dual message of satisfaction that so far the recovery is progressing better than expected but also continued concerns that the outlook could quickly darken without further government support.

Curt Long, chief economist for the National Association of Federally Insured Credit Unions, said the minutes showed Fed officials have “serious concerns over cuts to fiscal support.”

The prospects for approval of a new congressional package being passed before the Nov. 3 elections, however, have significantly diminished with President Donald Trump's decision to cut off negotiations with Democrats. Trump has instead proposed that Democrats approve individual rescue items, such as money for ailing airlines and another round of $1,200 checks for most adults, rather than a comprehensive aid package.

Federal Reserve Chairman Jerome Powell warned in a speech Tuesday of potentially tragic consequences if Congress and the White House do not provide further assistance, saying “the expansion is far from complete.”