The IMF sees a strengthening US economy, but noted that uncertainty surrounding fiscal stimulus spending and tax reform will slow growth projections going forward, Western Hemisphere Department Director Alejandro Werner told reporters Tuesday (June 27) in Washington.
Werner noted that the IMF survey of the US economy (known as Article IV review) saw real GDP is now 12 percent higher than its pre-recession peak, job growth has been persistently strong and, although there are measurement uncertainties, the U.S. economy appears to be back at full employment.
But projections this year have dimmed slightly from to an estimated 2.1 percent growth, down .2 percent from the previous World Economic Outlook estimate earlier this year.
In large part that slippage is due to receding prospects of tax reform and infrastructure spending being passed by Congress this year, Werner said.
“After discussions with the U.S. authorities, and given the still-evolving policy plans, we have decided to remove that assumed stimulus from our forecast and base our projections on unchanged policies,” Werner noted.
But the IMF and US authorities were in broad alignment on measures that could lead to higher growth rates, the report noted.
“As we have emphasized in past consultations, these include: generating faster economic and productivity growth, stimulating job creation, incentivizing business investment, balancing the budget and bringing down the public debt, and creating the fiscal space that is needed to finance priorities such as infrastructure and investments in human capital,” Werner said.
The IMF also emphasized the need to provide policies that help lower and middle income populations to mitigate rising income inequality.
Those plans should include programs to sure up social safety nets and provide job training to help workers adapt to economic trends and changes Deputy Director of the Western Hemisphere Department Nigel Chalk said.