‘Something will have to give:’ IMF sounds alarm on US debt

The International Monetary Fund (IMF) warned on Tuesday that the United States’ recent economic performance is partly the result of the country’s unsustainable fiscal practices, posing risks to the global economy.

“While the extraordinary recent performance of the United States has certainly been impressive and is a key driver of global growth, it also reflects strong demand factors, such as a fiscal stance that has diverged from long-term fiscal sustainability. ”, the IMF writes. Latest World Economic Outlook.

The report added: “This not only poses short-term risks to the deflation process, as it risks raising global financing costs, but also long-term fiscal and financial stability risks to the global economy. ” he continued. “Something’s gonna have to give.”

The IMF predicts the U.S. economy will grow 2.7% in 2024, revised upward by 0.6 percentage points from January and well above forecasts for other developed countries.

“The recent strong U.S. performance reflects strong productivity and employment growth, as well as strong demand in an economy that remains overheated,” Pierre-Olivier Grinchat, the IMF’s chief economist, said in a blog post. It reflects that.”

“This requires a cautious and gradual approach to easing by the Federal Reserve,” he added.

Congress passed a suspension of the debt ceiling last spring as part of a larger bipartisan agreement aimed at reining in annual government funding. At the time, the national debt was about $31.4 trillion, and it has since increased by trillions of dollars over the past year, the paper said. Ministry of Finance.

In the long-term budget outlook report released, early this yearthe Congressional Budget Office estimated that the national deficit “will increase significantly relative to gross domestic product (GDP) over the next 30 years, reaching 8.5% of GDP in 2054.”

The nonpartisan Budget Scorekeeper cited rising interest costs as a driver of expected growth, in addition to “a large and persistent primary budget deficit that excludes net spending on interest.”