The International Monetary Fund (IMF) recently sharply raised its 2021 US growth projection to 7 per cent due to a strong recovery from the pandemic and a feeling that much of President Joe Biden's infrastructure and social spending plans will be implemented. The latest forecast, marking the fastest growth pace since 1984, compares with an April projection of 4.6 per cent growth in 2021.
The organisation raised its 2022 US gross domestic product (GDP) growth forecast to 4.9 per cent, up from its previous 3.5 per cent forecast in April.IMF recently sharply raised its 2021 US growth projection to 7 per cent due to a strong recovery from the pandemic and a feeling that much of President Joe Biden's infrastructure and social spending plans will be implemented. The latest forecast, marking the fastest growth pace since 1984, compares with an April projection of 4.6 per cent growth in 2021. #
The new forecasts, published in the IMF's annual assessment of US economic policies, assume that the Congress will pass the Biden administration's American Jobs Plan and American Families Plan infrastructure, social spending and tax reform plans this year at a size and composition similar to their original proposals.
The two packages would implement many recommendations that the IMF has made for the country for years, including investments to boost productivity, education and to allow more women to join the American workforce, IMF managing director Kristalina Georgieva said.
"They will add to near-term demand, raising GDP by a cumulative 5.25 per cent over 2022 to 2024," global newswires quoted Georgieva as telling a news conference. They will also produce a lasting improvement in income and living standards, with a 1 per cent rise in GDP output even after 10 years, she added.
"Indicators suggest significant labor market slack remains which should serve as a safety valve to dampen underlying wage and price pressures," IMF said in its review statement.
IMF expects US inflation expectations to remain well-anchored, but these "will be obscured in the coming months by significant, transitory movements in relative prices," which could cause personal consumption expenditure inflation to peak temporarily near to 4 per cent later this year.
The IMF said the United States should prioritize its spending toward programmes with the biggest impact on boosting productivity, increasing labour force participation, reducing poverty and aiding a transition from carbon.
It said the United States should use tax policy to further these goals, scaling back poorly targeted tax expenditures and raising federal fuel taxes and introducing other carbon taxes.
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