US Federal Reserve Officials Highlight Need for Additional Aid

U.S. Federal Reserve officials last month agreed on the need for additional government action to support the economy, according to minutes from the July 28 meeting released last Wednesday. The comments come amid a Congressional stalemate over the size and scope of the next coronavirus relief bill.  

A key quote from the minutes reads as follows: “Participants observed that uncertainty surrounding the economic outlook remained very elevated, with the path of the economy highly dependent on the course of the virus and the public sector’s response to it … A number of participants observed that, with some provisions of the CARES Act set to expire shortly against the backdrop of a still-weak labor market, additional fiscal aid would likely be important for supporting vulnerable families, and thus the economy more broadly, in the period ahead.”

Fed officials did assume additional relief would ultimately be signed into law, but nonetheless predicted the rate of recovery in GDP and pace of declines in the unemployment rate would be “somewhat less robust than in the previous forecast.”

Elsewhere, the Treasury Department is working to finalize proposed regulations that would clarify the rules governing like-kind exchanges under section 1031. Notably, the regulations would impose a 15% cap on the value of incidental, non-real property received in an exchange (for example, furniture and other personal property included as part of an exchange of a commercial office building). The 2017 Tax Cuts and Jobs Act limited the eligibility of like-kind exchanges to real property only. With the public comment period now closed, Treasury will begin the process of codifying the final rule.