IMF downgrades US growth forecast for ’24

The International Monetary Fund (IMF) on Tuesday lowered its economic forecasts for the United States, revising its 2024 growth forecast downward to 2.6 per cent in its July World Economic Outlook. This is a 0.1 percentage point dip from the Fund’s April projections, reflecting a sluggish start to the year.

The report paints a picture of a gradually slowing US economy. Growth is expected to decelerate further to 1.9 per cent in 2025 as the labour market cools down and consumer spending takes a breather. This slowdown coincides with a planned tightening of fiscal policy. By the end of 2025, the IMF predicts growth will taper off to its long-term potential, closing the current gap between actual and potential economic output.

“In the United States, projected growth is revised downward to 2.6 percent in 2024 (0.1 percentage point lower than projected in April), reflecting the slower-than-expected start to the year.” the report read. “Growth is expected to slow to 1.9 percent in 2025 as the labour market cools and consumption moderates, with fiscal policy starting to tighten gradually. By the end of 2025, growth is projected to taper to potential, closing the positive output gap.’

The downward revision raises concerns about the resilience of the US economy in the face of global headwinds like inflation and rising interest rates. While the overall global growth outlook remains stable at 3.2 per cent for 2024, the US appears to be facing its own set of challenges.