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The economy has nearly stopped growing, but the Fed is staying the course

Lots of analysts predicted the Federal Reserve's Open Market Committee would make no major changes at its April meeting, and they were right. On Wednesday the FOMC announced it would continue tapering its QE3 program by $10 billion per meeting and keep interest rates at near-zero levels.

The decision to stay the course wouldn't be a big deal perhaps, except that the Commerce Department reported on Wednesday morning that first-quarter GDP slowed to a near-halt — an annual rate of 0.1 percent. That was way below consensus estimates, which had been around 1.1 percent, and a big deceleration from the fourth quarter's growth rate of 2.6 percent.

"Yes, there were winter problems, and while not all of the slowdown can be laid at the feet of mother nature recent indicators are that the economy is indeed growing a lot better than we saw early in the year," says Joel Naroff, president and founder of Naroff Economic Advisors, a consulting firm in Holland, Pennsylvania.

Consumer confidence, as measured by the Conference Board, slipped slightly in April but is still near a six-year high, and home prices have continued to climb. Economists also expect Friday's job report will show April payrolls grew by around 215,000 jobs, according to Bloomberg's consensus estimate.

Indeed, the FOMC in its statement characterized the economy as much stronger now than it had said in its March meeting. At that meeting, they said job market numbers were "mixed but on balance showed further improvement." This time around, they said the exact same thing

Likewise, in terms of the broader economy the Fed now says "growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions."

One of the most important indicators that the Fed looks at — unemployment — will be updated on Friday. If that report is disappointing, that could signal the Fed will have to stray from its tapering roadmap. But to change course now, only to see the job market is roaring back to life, could hurt the Fed's credibility. If the outlook really changes, it's likely the Fed will take action at its June 17 and 18 meeting, after which Janet Yellen will hold a press conference, where she can explain any unexpected moves.