In an updated outlook released Tuesday, the global lending organization forecasts that the world economy will grow 3.7% in 2014 and that the U.S. economy will grow 2.8%. The global forecast is 0.1 percentage point higher and the U.S. forecast 0.2 point higher than the IMF’s October forecast.
By 2015, the IMF forecast the U.S. economy will grow 3%, or 0.4 percentage point lower than its October forecast. The IMF reduced its outlook because a recent budget agreement left in place most of the spending cuts. The IMF had expected most of those cuts to have been eliminated by next year.
My opinion: With businesses already slow to hire new workers (reference previous post) I don’t understand why Congress continues to push for spending cuts. I do understand the perception that once spending is increased, it is hard to retract; however — we aren’t talking about increases — this is about cuts and I don’t believe this is the time to make these cuts. As you can see from the statement made by the IMF above, neither do they as the 2015 forecast was reduced because of the renewed spending cuts. Now a year into his second term, Obama needs to start making sharper statements concerning the Republicans’ ill-conceived ‘moocher-class’ platforms and reference these reports.
Even though this could easily turn into an opinion about the current ‘wealth-distribution’ problem in the U.S., let’s save that for another time.