IMF Executive Board Concludes 2026 Article IV Consultation with the United States

IMF News, April 2, 2026

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GDP growth reached 2 percent in 2025 despite major policy shifts and a Q4 government shutdown, supported by strong, broad-based productivity growth.
Inflation moved sideways in 2025 as tariff-driven goods inflation offset declining services inflation.
Employment growth slowed, in part due to sharply lower immigration flows.
The federal fiscal deficit fell from 6.3 percent of GDP to 5.9 percent of GDP in fiscal year 2025.
General government debt rose to 123.9 percent of GDP in 2025.
The current account deficit remained large at 3.7 percent of GDP.

GDP growth is projected to rise to 2.4 percent in 2026 (on a q4/q4 basis).
Core PCE inflation is expected to return to 2 percent during the first half of 2027 as tariff effects fade and oil prices decline from currently elevated levels.
Employment is expected to grow at less than one-half of the pace seen in the five years prior to the pandemic; the unemployment rate should remain close to 4 percent in 2026–27.
Near-term risks to growth and unemployment are broadly balanced; rising energy prices create upside risks to inflation.

The tax and spending changes legislated in 2025 are expected to provide a modest boost to activity and to raise the deficit in the near term.
The general government deficit is expected to remain in the 7–7 ½ percent of GDP range.
General government gross debt is projected to exceed 140 percent of GDP by 2031.
Federal government fiscal balance and debt (selected figures):
- Federal government fiscal balance (% of GDP): -6.3 (2024), -5.9 (2025), -6.1 (2026), -6.0 (2027), -5.8 (2028)
- Federal government debt held by the public (% of GDP): 97.4 (2024), 99.4 (2025), 100.6 (2026), 102.6 (2027), 104.9 (2028), 107.0 (2029), 108.7 (2030), 110.1 (2031)
General government fiscal balance and debt (selected figures):
- General government fiscal balance (% of GDP): -7.9 (2024), -6.8 (2025), -7.5 (2026), -7.3 (2027), -7.2 (2028), -7.2 (2029)
- General government gross debt (% of GDP): 122.3 (2024), 123.9 (2025), 125.8 (2026), 128.7 (2027), 132.1 (2028), 135.3 (2029), 138.5 (2030), 141.5 (2031)

The applied effective tariff rate on imports to the U.S. is expected to settle at 7–8.5 percent after recent changes to tariff authority take effect.
The net effect of higher tariffs and fiscal policy changes is a modest decline in the current account deficit over the medium term to around 3½ percent of GDP, remaining well above pre-pandemic levels.
Directors expressed concern that increased tariffs and trade policy uncertainty are expected to reduce U.S. activity and create sizeable negative spillovers for trading partners.
Current account balance (% of GDP): -4.0 (2024), -3.7 (2025), -3.8 (2026), -3.6 (2027)

Actions underway: recalibrate or eliminate certain financial regulatory requirements, tailor supervision to activity risk, and introduce a regulatory framework for digital assets.
The Federal Reserve has discontinued the runoff of its balance sheet, started reserve management purchases, and enhanced standing repo operations.
Directors called for:
- Strengthening oversight of the financial system to manage vulnerabilities from elevated asset valuations and nonbank financial intermediation.
- A cautious approach to further reducing bank capital and maintaining U.S. regulatory requirements consistent with international minimum standards.
- Full implementation of the final components of the Basel III agreement, increased regulatory requirements for mid-sized banks, and further strengthening supervisory oversight and practices.
- Implementation of a comprehensive regulatory and supervisory framework for digital assets, with attention to risks to financial integrity.
- Use of the upcoming FSAP to undertake a comprehensive assessment of financial oversight and potential systemic stability risks.
Directors welcomed recent legislation clarifying regulatory treatment of stablecoins and other crypto-assets and reforms to improve Treasury market functioning.

Directors welcomed strong U.S. economic performance, noting support from productivity growth, expansionary fiscal policies, and policy rate cuts.
Key concerns identified:
- Heightened domestic and global uncertainties from significant policy shifts and the war in the Middle East.
- Persistently high fiscal deficits, rising debt-GDP ratio, and an increasing share of short-maturity debt.
- Size and persistence of the U.S. current account deficit and a moderately weaker external position relative to fundamentals and desirable policies.
Policy recommendations:
- Determine and implement a frontloaded fiscal adjustment to address longstanding fiscal imbalances, including increasing federal revenues and rebalancing entitlement programs.
- Maintain the Federal Reserve’s careful, data-dependent, and well-communicated calibration of monetary policy; avoid further policy rate cuts in 2026 unless there is a material worsening of labor market prospects and a decline in inflationary pressures.
- Work constructively with trading partners to agree on a coordinated reduction in trade restrictions, industrial policy, and other distortions; consider global climate objectives in energy policy deliberations.
- Implement policies to raise private saving to lessen external vulnerabilities.
- Strengthen financial oversight and supervisory practices to address nonbank intermediation risks and elevated asset valuations.

Real GDP (annual growth): 2.8 (2024), 2.1 (2025), 2.5 (2026), 2.2 (2027), 1.9 (2028), 1.8 (2029)
Real GDP (Q4/Q4): 2.4 (2024), 2.0 (2025)
Output gap (% of potential GDP): 0.4 (2024), 0.0 (2025)
Unemployment rate (Q4 average): 4.1 (2024), 4.5 (2025), 4.3 (2026), 3.9 (2027)
Fed funds rate (end of period): 4.4 (2024), 3.6 (2025), 3.4 (2026), 3.1 (2027), 2.9 (2028)
Ten-year government bond rate (Q4 average): 3.8 (2024), 3.7 (2025)
PCE Inflation (Q4/Q4): 2.6 (2024)
Core PCE Inflation (Q4/Q4): 3.0 (2024)

Source: IMF Executive Board press release, April 2, 2026.