IMF lowers forecast for US
Source: Bloomberg News |
April 12, 2011, Tuesday
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Print Edition
Print Edition
THE International Monetary Fund lowered its forecast for United States growth this year, predicting higher oil prices and the pace of job gains will restrain the recovery.
The world's largest economy will expand 2.8 percent this year, down from the 3 percent projected in January, the IMF said yesterday. Global gross domestic product will grow 4.4 percent in 2011, matching the previous estimate, according to the Washington-based lender's World Economic Outlook report.
Consumer spending, the biggest part of the US economy, faces headwinds from the rising cost of food and gasoline. Federal Reserve officials last month said the expansion is on "firmer footing," lessening the need to extend a bond purchase program beyond June.
"Recovery in the labor market remains lackluster," the IMF said. "The drag on 2011 growth from oil price increases largely offsets the boost from the Federal Reserve's unconventional policies and from stronger net exports."
The US economy grew 2.9 percent last year, the most since 2005, according to figures from the US Commerce Department. The GDP will expand 2.9 percent this year and 3.1 percent in 2012, according to the median estimate of about 70 economists surveyed by Bloomberg News from April 1 to April 7.
"This may just be a pause that refreshes in the overall expansion," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd in New York, said last Friday. "The primary risk to the forecast is oil, front and center."
Crude oil for May delivery rose US$2.49 to US$112.79 a barrel on the New York Mercantile Exchange last Friday, the highest settlement since September 22, 2008.
The jobless rate in the US will average 8.5 percent this year and 7.8 percent in 2012, the IMF said in the report. Unemployment was 8.8 percent in March, according to the US Labor Department data.
"Job creation has accelerated, but the pace of improvement in the labor market remains disappointing considering the size of the job losses during the decline," the IMF.
The IMF also highlighted several risks to the recovery, including a spike in oil and commodity prices that "could dampen confidence and weaken consumer spending."
The world's largest economy will expand 2.8 percent this year, down from the 3 percent projected in January, the IMF said yesterday. Global gross domestic product will grow 4.4 percent in 2011, matching the previous estimate, according to the Washington-based lender's World Economic Outlook report.
Consumer spending, the biggest part of the US economy, faces headwinds from the rising cost of food and gasoline. Federal Reserve officials last month said the expansion is on "firmer footing," lessening the need to extend a bond purchase program beyond June.
"Recovery in the labor market remains lackluster," the IMF said. "The drag on 2011 growth from oil price increases largely offsets the boost from the Federal Reserve's unconventional policies and from stronger net exports."
The US economy grew 2.9 percent last year, the most since 2005, according to figures from the US Commerce Department. The GDP will expand 2.9 percent this year and 3.1 percent in 2012, according to the median estimate of about 70 economists surveyed by Bloomberg News from April 1 to April 7.
"This may just be a pause that refreshes in the overall expansion," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd in New York, said last Friday. "The primary risk to the forecast is oil, front and center."
Crude oil for May delivery rose US$2.49 to US$112.79 a barrel on the New York Mercantile Exchange last Friday, the highest settlement since September 22, 2008.
The jobless rate in the US will average 8.5 percent this year and 7.8 percent in 2012, the IMF said in the report. Unemployment was 8.8 percent in March, according to the US Labor Department data.
"Job creation has accelerated, but the pace of improvement in the labor market remains disappointing considering the size of the job losses during the decline," the IMF.
The IMF also highlighted several risks to the recovery, including a spike in oil and commodity prices that "could dampen confidence and weaken consumer spending."
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