IMF Predicts Economic Growth Under 2% Per Year Through 2012

More bad economic news in the latest forecast from the International Monetary Fund:

The International Monetary Fund lowered its forecast for U.S. growth this year and in 2012, citing unresolved debt-reduction concerns and waning confidence among consumers and businesses.

The world’s largest economy will expand 1.5 percent this year, down from the 2.5 percent projected in June, the Washington-based lender said today in its World Economic Outlook report. Unemployment will average 9 percent or higher through next year, the IMF said.

Declining sentiment among Americans and a stagnant labor market threaten household spending, the biggest part of the U.S. economy. The pace of job growth puts pressure on President Barack Obama, lawmakers and the Federal Reserve to take steps to increase payrolls.

“Bold political commitment to put in place a medium-term debt reduction plan is imperative to avoid a sudden collapse of market confidence that could seriously disrupt global stability,” the IMF said in the report. “Downside risks weigh on the outlook given fiscal uncertainty, weakness in the housing market and household finances, renewed financial stress, and subdued consumer and business sentiment.”

(…)

The U.S. economy will grow 1.8 percent next year, compared with the 2.7 percent forecast issued three months ago, according to today’s IMF report. GDP will expand 1.6 percent this year and 2.2 percent in 2012, according to the median estimate of 63 economists surveyed by Bloomberg News from Sept. 2 to Sept. 7.

U.S. consumer prices will climb 3 percent this year before rising 1.2 percent in 2012, according to the IMF report. The cost of living in the U.S. increased 3.8 percent in the 12 months through August, according to the Labor Department in Washington.

What this suggests, of course, is that job growth is likely to remain about where its been all year for the next 15 months or so, a projection that’s in line with those made by other analysts and by the White House’s Office of Management and Budget. And that presumes that nothing happens to throw growth into a tail spin, like Europe setting off another 2008-like financial crisis. If that happens, then I think it’s safe to say that all bets are off.

FILED UNDER: Economics and Business, Quick Takes
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Sam says:

    Doesn’t Obama’s job bill use growth of 5%?

  2. Hey Norm says:

    For reference…growth under Bush for 8 years…and his magic unicorn tax cuts…was just over 2%.

  3. legion says:

    And dollars to donuts (’cause that’s all you’ll get) that the vast majority of that piddling 2% goes directly into the accounts of the top .5%, rather than into new hires, wage improvements, or capital expansions, thus ensuring that future growth will continue to shrink. Welcome to the End of America.

  4. Sam says:

    GDP under Bush went from 2.45 in 2002 to 4.4 in 2004 after his tax cuts of 2001 and 2003.

    I’m quite sure that the WTC attacks had nothing at all to do with any GDP issues then. You know, when the airline industry took a beating as did our economy.

    http://www.indexmundi.com/g/g.aspx?c=us&v=66

  5. Sam says:

    And if anyone remembers, that low GDP under Bush was reported to be the end of the world as we knew it.
    Now? Not so much.

  6. Hey Norm says:

    So Sam…
    Are you saying that the WTC attacks that happened on Bush’s watch negatively affected the GDP, and so it’s not his fault…even though the attacks that negatively affected the GDP happened on his watch?
    Is that what you are saying?

  7. Ben Wolf says:

    @Sam: Average GDP growth during the Bush administration was 1.86%. There’s no evidence the tax cuts had a significant impact. In fact there’s no empirical evidence tax cuts stimulate long-term economic growth at all.

  8. ponce says:

    The IMF also predicted China’s economy would continue to grow at an annu7al rate of 9-9.5%.

    We need to lure some of China’s “job creators” over here asap.