The latest IMF report for the U.S. economy says that the recovery has been weak,with GDP
growth of 2% in 2012,legacy of the financial crisis,the budget deficit reduction,a weak external
environment in China the EU and other developed economies.
"While policymakers in Congress averted the fiscal cliff at the beginning of 2013, the expiration of the payroll tax cut and implementation of across-the-board spending cuts are weighing significantly on growth this year, with growth in the first quarter of 2013 at 1.8 percent and indicators suggesting slower growth in the second quarter"
Despite these powerful headwinds, there are a few bright spots in the economy "equity valuations have soared in 2013 and house prices have increased by more than 10 percent over the last 12 months, strengthening household balance sheets and supporting private demand. At the same time, residential construction has accelerated and labor market conditions have improved"
To a large extent this owes to a extremely accommodative monetary policy. Since mid-may after the
FMOC meeting where Fed Chairman said that in the near future, the central bank would start to scale
back its bonds buying,financial conditions have somewhat tightened,but monetary policy still remains extremely accommodative.
Because of the rapid consolidation of the fiscal budget growth will kept subdued to a 1.7% rate
in 2013. The IMF expects economic growth to accelerate to 2.7 percent next year as the fiscal drag subsides and the side-effects of financial crisis wane further. The unemployment rate is expected to remain stable in 2013, and to gradually fall in 2014. Inflation is expected to pick up somewhat but to remain below the Fed long-run objective of 2%.
The IMF report says "risks to the outlook appear modestly tilted to the downside. Economic activity could be lower than in our baseline scenario in the presence of a stronger-than-projected impact of fiscal consolidation, a faster-than-expected increase in interest rates, a weaker external environment, or higher structural unemployment"
It agrees wih the Fed Board in mantaining a very accommodative monetary policy,for a considerable
time after the economy strengthens, and that the pace and composition of its asset purchases will depend on the evolution of economic conditions.
It also says that bank conditions have improved substantially over the year up to date but there signs of emerging vulnerabilities in the financial sector from persistently low interest rates
growth of 2% in 2012,legacy of the financial crisis,the budget deficit reduction,a weak external
environment in China the EU and other developed economies.
"While policymakers in Congress averted the fiscal cliff at the beginning of 2013, the expiration of the payroll tax cut and implementation of across-the-board spending cuts are weighing significantly on growth this year, with growth in the first quarter of 2013 at 1.8 percent and indicators suggesting slower growth in the second quarter"
Despite these powerful headwinds, there are a few bright spots in the economy "equity valuations have soared in 2013 and house prices have increased by more than 10 percent over the last 12 months, strengthening household balance sheets and supporting private demand. At the same time, residential construction has accelerated and labor market conditions have improved"
To a large extent this owes to a extremely accommodative monetary policy. Since mid-may after the
FMOC meeting where Fed Chairman said that in the near future, the central bank would start to scale
back its bonds buying,financial conditions have somewhat tightened,but monetary policy still remains extremely accommodative.
Because of the rapid consolidation of the fiscal budget growth will kept subdued to a 1.7% rate
in 2013. The IMF expects economic growth to accelerate to 2.7 percent next year as the fiscal drag subsides and the side-effects of financial crisis wane further. The unemployment rate is expected to remain stable in 2013, and to gradually fall in 2014. Inflation is expected to pick up somewhat but to remain below the Fed long-run objective of 2%.
The IMF report says "risks to the outlook appear modestly tilted to the downside. Economic activity could be lower than in our baseline scenario in the presence of a stronger-than-projected impact of fiscal consolidation, a faster-than-expected increase in interest rates, a weaker external environment, or higher structural unemployment"
It agrees wih the Fed Board in mantaining a very accommodative monetary policy,for a considerable
time after the economy strengthens, and that the pace and composition of its asset purchases will depend on the evolution of economic conditions.
It also says that bank conditions have improved substantially over the year up to date but there signs of emerging vulnerabilities in the financial sector from persistently low interest rates
