The International Monetary Fund (IMF) on Thursday revised its growth forecast for the United States this year very slightly downward, nevertheless welcoming an economy “robust, dynamic and able to adapt to changing global conditions”. The gross domestic product (GDP) of the world’s largest economy is expected to grow by 2.6% in 2024, according to the IMF, which expected an increase of 2.7% in its previous forecasts, published in April.
As for inflation, it has been slowing since mid-2022, when it reached its peak, the highest since the early 1980s. The PCE inflation index was 2.7% in April, and the IMF sees it return to its target of 2% by mid-2025. The economic institution, in its report on the state of the American economy, emphasized that “activity and employment continue to exceed expectations”. “And the disinflation process has been much less costly than many feared.”notes the IMF. “Nevertheless, the budget deficit is too large”he laments.
Good health
Moreover, “continued expansion of trade restrictions and insufficient progress in addressing vulnerabilities highlighted by the 2023 bank failures pose significant downside risks”, warns the institution. Nevertheless, “The outlook is for healthy and continued growth”estimates the IMF.
Several reasons should support this good health, he details, mentioning in particular “a significant (and continuing) increase in household wealth which should support consumer demand”. “Homeowners, in particular, have benefited from a nearly 50% increase in average house prices since the end of 2019”it is specified. The IMF also indicates that the terms of trade have improved, which is linked “largely because the United States is a net exporter of natural gas, crude oil and petroleum products”.
Furthermore, on the employment front, the situation has improved, after a shortage of labour following the Covid-19 pandemic, “thanks to the influx of migrants (who have increased the workforce by almost 3% over the last three years)”but also to an increased rate of participation in the labor market, “and increasing productivity”according to the IMF.
