{Americas} The U.S. economy will grow this year and next year, and the IMF will cut it

The International Monetary Fund (IMF) warned on the 12th (Tuesday) that the "challenging" of avoiding a recession in the United States is "growing", saying that recent data reflects weak consumer spending, and it once again lowered its economic growth forecast for the United States this year, from 2.9%. It was revised to 2.3%, and the unemployment rate forecast was also raised.

 

The IMF lowered its forecast for real U.S. gross domestic product (GDP) growth in 2023 to 1.0 percent, down from a June 24 estimate of 1.7 percent.

 

The IMF expects the U.S. unemployment rate to reach 3.7% this year, higher than the previous estimate of 3.2%, next year’s unemployment rate will be about 4.6%, and the unemployment rate in 2024 and 2025 will be above 5%.

 

"It is increasingly challenging for the U.S. to avoid recession ... Russia's invasion of Ukraine, the lingering COVID-19 pandemic, and supply chain constraints pose additional challenges," the IMF said.

 

In a statement, the agency's top officials pointed out that rising inflation has "created systemic risks" to the U.S. and global economies, noting that the Federal Reserve's (Fed) monetary tightening policy should help keep inflation at the fourth peak in 2023. The quarter fell to 1.9%, and inflation is estimated to have reached 6.6% in the fourth quarter of this year. While curbing inflation will further decelerate U.S. growth, the IMF expects the U.S. should be able to avoid recession.

 

"The current policy priority must be to quickly moderate wage and price growth while preventing a sudden recession. This will be a tricky task," the report said.

 

Andrew Hodge, an economist in the IMF's Western Hemisphere Department, said in a blog post that the Fed's hike in interest rates and reduced government spending will affect consumer spending growth early next year to around zero, helping to ease supply chain constraints. The moderation brings the U.S. unemployment rate to around 5% by the end of 2023, which should lead to lower wages by then.”

 

The top IMF policy prescription to the U.S. government calls for passage of Biden’s social and climate spending bill, arguing that the still-stuck proposal will boost labor force participation, ease inflation, and help transition to a low-carbon economy.

 

The report mentioned that IMF executives have recommended the withdrawal of trade restrictions and tariffs implemented over the past five years, including Trump-ordered tariffs on Chinese goods, steel and aluminum, and continued these tariffs after Biden took office. (Source: chinatimes0714) ☺