The economy is going to take a hit and we’ll likely see a chill in consumption patterns as re-openings roll back in some states due to escalating virus cases, Ed Harrison said during today’s Real Vision Daily Briefing.

The question is how worried should we be, and Harrison said he thinks the answer to that may lie in the actions of the Federal Reserve.

Despite appearing confident on the surface, he thinks the mandate from the Fed capping shareholder payouts and halting buybacks until at least Q4 shows that they’re anticipating a significant adverse scenario going forward.

According to Harrison, the Fed is basically saying that the potential for a bad outcome in terms of loan losses is larger than what they are prepared to tolerate. And as alarming as the mandate is, one Fed board governor expressed that the action still isn’t enough to mitigate damage and proposed that banks stop dividends altogether.

With the Dow, S&P, and NASDAQ all down today, Harrison said it appears that we’re in a seesaw now in terms of volatility between the reopening rally and the COVID fallout. Whether this second wave is going to have significant economic impact remains to be seen, but Harrison thinks the signs are already there.

“The severely adverse scenario the Fed outlined in February is happening right before our eyes,” he said. “We’re seeing it with store closings, the rolling back of re-openings in Florida and Texas. That’s the W. The Fed says one thing but underneath it is clearly anticipating more adverse scenarios to come.”