The meeting minutes underscore how Fed leaders view another stimulus package — one that reaches households, businesses and local governments still on the brink — as essential to a strong and stable recovery.

At the meeting, Fed leaders updated their estimates on unemployment in the coming years to reflect a sense of optimism that people were returning to work faster than expected. But in many cases those projections factored in some measure of more fiscal aid, the prospects of which were thrown into chaos Tuesday after Trump abruptly called off negotiations before then continuing to push for more talks on narrower targeted aid.

“If future fiscal support was significantly smaller or arrived significantly later than they expected, the pace of the recovery could be slower than anticipated,” according to the Fed minutes.

Fed policymakers also warned that, while the Cares Act was crucial for providing benefits to millions of families, Congress’s “support so far for households, businesses, and state and local governments might not provide sufficient relief to these sectors,” the minutes read. Fed leaders pointed to “the extent and timing of additional fiscal support” as another source of uncertainty, along with the economic toll of school and small-business closures, as well as bankruptcies.

On Tuesday, Fed Chair Jerome H. Powell again called on Congress to keep up the support, especially for pockets of the economy that were not experiencing a rebound. Speaking at the annual meeting of the National Association for Business Economics, Powell said that too-little support could ultimately lay a foundation for household insolvencies, business bankruptcies and meager wage growth.

“By contrast, the risks of overdoing it seem, for now, to be smaller,” Powell said Tuesday. “Even if policy actions ultimately prove to be greater than needed, they will not go to waste.”

But on Tuesday afternoon,

U.S. hiring gains likely cooled in September, suggesting labor-market improvements from the coronavirus downturn are moderating as employers confront a prolonged period of uncertainty.

Economists expect employers added about 800,000 jobs in September and that the jobless rate fell to 8.2%, from 8.4% the preceding month. Such payroll gains would add to the 11 million jobs recovered after 22 million were lost in March and April at the beginning of the pandemic, but would also mark the first month since April that net hiring was below 1 million.

Unemployment is now in line with previous recessions and remains well above levels seen before the pandemic. The jobless rate stood at 3.5% in February, a half-century low, just ahead of the coronavirus crisis.

Friday’s Labor Department report will be the final jobs report before the presidential election. President Trump and Democratic presidential candidate Joe Bidenhave promised to create millions of jobs since the pandemic shocked the U.S. labor market this spring.

Employers continue to bring back workers, and the labor market has regained jobs faster than many economists projected, but some factors are hindering economic momentum. For one, the initial hiring rebound from business reopenings is easing as states lift restrictions at a slower pace than earlier in the summer. Further, layoffs and the resulting claims for unemployment compensation have remained elevated compared with pre-pandemic peaks, though they are down from highs reached earlier in the crisis.

“Unfortunately, the layoffs don’t seem to be slowing down, so you’re running up against a really persistent negative drag,” said Marianne Wanamaker, a labor economist at the University of Tennessee, Knoxville. “It’s really hard to hire that fast to recover everything you’re losing.”

Other economic readings such as consumer spending and manufacturing output show the recovery is continuing, but at a slower pace. A

WASHINGTON (AP) — U.S. consumer spending slowed in August and personal income fell as a $600 weekly benefit for Americans who are unemployed during the pandemic expired.

The Commerce Department reported Thursday that spending grew by just 1%, the weakest growth since spending fell 12.7% in April when rapidly spreading COVID-19 infections shut down large parts of the economy.

A 2.7% drop in income in August followed a gain of 0.5% in the previous month. The drop reflected the expiration of the $600 expanded unemployment benefit on July 31. Congress has so far failed to come up with a new virus relief package that would restore that benefit.


Economists fear that without further government support, the economy will slow significantly in the final three months of this year as consumer spending slows with millions of people still out of work and government support fading.

“Unless employment growth picks up or additional fiscal aid is extended, consumer spending is at risk of slowing dramatically,” said Gregory Daco, chief U.S. economist at Oxford Economics.

Inflation, as measured by a gauge tied to consumer spending, rose 0.3% in August and is up 1.4% over the past 12 months. That is well below the Federal Reserve’s target to achieve 2% annual gains in inflation.

The Fed in August said it was changing its policy to delay rate hikes until inflation has risen above 2% for a period of time, a change that should keep consumer and business borrowing costs lower for an extended period of time. The Fed projected no hikes of its benchmark rate through 2023.

The 2.7% drop in incomes reflected a huge 14.8% decline in the category that covers government payments including unemployment benefits. Democrats and Republicans have been unable to restore the expired benefits because of wide differences between the

Banks that had declined to take part in the program mentioned “their ability to provide credit to eligible borrowers without the MSLP, as well as unattractive key MSLP loan terms for lenders as reasons for not registering,” the report said.

The results revealed a wide gap between how banks view the Main Street program and how key Fed officials see it.

Eric Rosengren, president of the Boston Fed, which administers the program, said in a Sept. 23 speech that the terms “should be attractive to banks, both because of the fees collected” and because the Fed buys out 95% of every loan.

He then pointed a finger at larger institutions for not participating. “None of the nation’s largest banks, by this metric, are currently active in the program,” he said.

The Main Street program has come in for criticism and scrutiny from lawmakers for so far lending out only about $2 billion of its $600 billion capacity.

The survey also showed banks expect loan inquiries from businesses of an eligible size to increase over the next three months, but “only a modest share of banks expected their willingness to extend MSLP loans to increase over the same period.”

A majority of banks said that potential qualified borrowers had debt levels too high to meet the program’s thresholds, and the required certifications and covenants were too restrictive for borrowers. The loans’ interest rates, five-year maturity and payback schedule were not as important factors.

Some 68% of banks said the program’s $250,000 minimum loan size was not an important factor in rejecting loans or registering for the program. Several lawmakers pressed Fed Chair Jerome Powell, who testified before several congressional committees last week, to lower this amount, saying there was demand for smaller loans.

One potential reason for the lower demand for