The International Monetary Fund issued on Friday its preliminary findings on the state of the United States economy following its official visit to the country, predicting annual GDP growth of 1.7% in 2023, followed by 1% next year. This slowing will likely be followed by an increase in unemployment to about 4.5% by the end of 2024.
Turning to inflation, the IMF noted consumer prices will continue to decrease while warning inflation is expected to remain above the Federal Reserve's 2% target range over the next two years. "To bring inflation firmly back to target will require an extended period of tight monetary policy, with the federal funds rate remaining at 5.25–5.5% until late in 2024," the IMF noted in a report published on its website.
Furthermore, the IMF also showed a scenario where the US economy would slow more abruptly, likely next year, creating a recession prompted by tighter monetary policy. In this case, the combination of high interest rates, a strong dollar, and a sharper slowdown in business activity would have significant negative macro-financial spillovers worldwide, the IMF warned.
