The recession testing the limits and shortfalls of the Federal Reserve’s toolkit – The Washington Post

The Washington Post acknowledges the crisis at hand in the US job market and how hopes are fading for another rescue package from Capitol Hill.

Now, six months into the crisis, it isn’t entirely clear what comes next. At this week’s meeting, the Fed isn’t expected to change rates. Powell has said that the Fed isn’t “even thinking about thinking about raising rates," and the emergency programs are staying in place,

the article reads, noting that the economy remains in trouble.

Just over half of the 22 million total jobs lost between February and April have not returned. Hopes are fading for another rescue package from Capitol Hill.

The article goes on to quote William Spriggs, chief economist to the AFL-CIO and an economics professor at Howard University:

The rest of us have to come to the realization that fiscal response is absolutely necessary,

You cannot borrow your way to rich. And that’s the Fed’s function.

The Fed’s function is to make sure that borrowing and liquidity are there, and that healthy firms have a way to smooth their income so that they can make it.

We are no longer in that ‘smoothing income’ phase.

The Washington Post notes that the coronavirus has claimed at least 191,000 lives in the U.S., and health officials warn that outbreaks colliding with flu season in the fall and winter could be even more overwhelming. With each passing week, fear is growing that the longterm wounds of this recession will turn to scars.

The longer-term challenge here is that the decisions we’re making in this period of time are going to shape the structure of the economy that emerges from it,

said Judge, of Columbia Law School.