The International Monetary Fund has raised its US 2021 GDP growth projection to 7.0% from 6.4% in April due to unprecedented fiscal, monetary support
- raises 2022 US growth projection to 4.9% from 3.5% in april -US article iv review statement
- US growth forecasts assume that biden's american jobs plan, american families plan are enacted in 2021 at size, composition similar to administration proposals
- it sees significant labor market slack in the United States that should act as 'safety valve' to dampen wage, price pressures
- proposed US federal tax and spending changes are aligned with past IMF policy advice
- US should prioritize spending toward programs with biggest impact on productivity, labor force productivity, poverty reduction, reducing carbon emissions
- US should introduce carbon tax or raise federal fuel taxes, scale back poorly targeted tax expenditures
- it expects US inflation expectations to remain well-anchored
Headlines via Reuters. The IMF here is going along with the consensus at the Federal Reserve that inflation is transitory it would appear. I bolded the 'slack labor market' comment as it seems the most significant related to inflation pressures.
