In its newest report on the world’s largest economy, the IMF urged Washington to boost the nation’s sluggish long-term growth and employment rates to tackle its social vows.
“Despite improving growth and rising employment, almost 50 million Americans still live in poverty, unable to earn enough to meet their basic needs… Improved employment prospects and economic growth will be essential to bringing this number down,” the IMF said in its annual survey.
It emphasized the importance of the United States agreeing a “credible medium-term fiscal consolidation plan” that can be designed to reduce poverty, and also encourage longer-term growth. The necessity of a plan brought into the limelight by a three-week shutdown in 2013, after months of debt ceiling impasse.
The global economic monitor pointed to a slump in US economic activity in the first quarter of 2014 following an unusually harsh winter, which together with a struggling housing market, slower exports demand and a 2.9-percent drop in home production output, stole the momentum of the second half of 2013.
“Growth for the year as a whole will be a disappointing 1.7 percent,” the report said, citing the “large drag” from the first quarter contraction, which will be difficult to offset.
Still, the report sought to raise hopes of acceleration in the remainder of this year and further in 2015, with growth pace predicted to surpass the fastest annual rate seen since 2005. It also said it expects potential growth to level off at around 2 percent, in contrast to the average 3 percent before the Great Recession.
The IMF recommended that the United States counter the current decline in growth rate with greater investment injections in its infrastructure, a better tax system, and improving the skill of its labor force through job training and immigration reform.
In early 2013, the Obama administration approved sequester budget cuts that will the costs of many federal anti-poverty programs slashed by five percent each year for a decade.
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