Fed pledges “to using its full range of tools” to support economy, as consumer confidence wanes and worries increase.

Today the Federal Reserve issued its Federal Open Market Committee statement, pledging to do all it can to support the economy, while acknowledging that much depends on the pandemic.

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year…

The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.

This comes as The Conference Board announces a drop in consumer confidence.

The Conference Board, a New York-based research organization, reported Tuesday that its Consumer Confidence Index fell from a June reading of 98.3. The weakness came from a drop in the expectations index, which measures consumer views about the short-term outlook for income, business and labor market conditions.

The consumer confidence index is closely watched for signals it can send about future consumer spending, which accounts for 70% of economic activity.

The Associated Press reports continuing worries about any near-term economic recovery.

Having endured what was surely a record-shattering slump last quarter, the U.S. economy faces a dim outlook as a resurgent coronavirus intensifies doubts about any sustained recovery the rest of the year.

A huge plunge in consumer spending as people stayed home and avoided shopping, traveling or gathering in crowds as the virus raged is estimated to have sent the economy sinking at a roughly 32% annual rate in the April-June quarter…

So dizzying was the contraction last quarter that most analysts expect the economy to manage a sharp bounce-back in the current July-September quarter, perhaps of as much as 17% or higher on an annual basis. Yet with the rate of confirmed coronavirus cases now rising in a majority of states, more businesses being forced to pull back on re-openings and the Republican Senate proposing to scale back the government’s aid to the unemployed, the economy could worsen in the months ahead.

Yesterday we wrote that Congress remains deeply divided about another federal pandemic relief package, with the Senate’s trillion-dollar proposal offering no new funding for state and local governments. With rising COVID-19 caseloads jeopardizing rented economic activity, conditions may yet worsen again. That’s one reason we’re very concerned about the cost of delaying state budget actions to address the shortfall.