IMF Again Cuts U.S. 2022 Growth Forecast To 2.3% As Consumer Spending Cools

• On July 12, 2022, the International Monetary Fund, once more cut its growth forecast for the United States to 2.3% for 2022 from its estimate of 2.9% in late June. The report cites recent downward revisions to first-quarter U.S. GDP output and consumer spending in May as reasons for the change in projections.
• The IMF also cut its 2023 U.S. real GDP growth forecast to 1.0% from 1.7%, based on data revisions that showed "significantly less momentum" in private consumption and spending of savings built up over the pandemic.
• The IMF said that U.S. inflation pressures are broad-based, with declining price growth in durable goods largely offset by an acceleration of prices for shelter, healthcare, and other services, along with rising food and energy prices. "The policy priority must now be to expeditiously slow wage and price growth without precipitating a recession," the IMF said in the Article IV staff report.
• The Fund said Fed monetary policy tightening should help bring down inflation to 1.9% by the fourth quarter of 2023, compared with a forecast of 6.6% for the fourth quarter of 2022. It is also of the opinion that this will further slow U.S. growth and also allow the country to avoid a recession.

(Source: Reuters)