US Growth expectations cut

The global recovery is a lot more advanced in the US than in many other developed economies, however the IMF sees some important weaknesses and has called for a catalogue of measures to boost what it calls the modest prospects for productivity growth.

Job growth, has been healthy, but the labour market is weaker than is suggested by the headline numbers for people out of work. Long-term unemployment is high and many people are not even seeking work, which means they don’t register in the official jobless numbers.

Wages are stagnant and poverty is stuck at more than 15%. Seven years on from the onset of the financial crisis, the scars on the wider US economy – never mind some European countries – have still not really healed.

It is on that basis that The International Monetary Fund has cut its US growth forecast, urged policy makers to keep interest rates low and raise the minimum wage to strengthen its recovery. Growth is now expected to be 2% this year, down from its April forecast of 2.8%, after a “harsh winter” led to a weak first quarter. However forecasted expectations are that growth for 2015 will be 3%.