United States: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the United States

IMF Staff Country Reports, July 22, 2021

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United States: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the United States

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Bibliographic details

• Published: July 22, 2021
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513591810.002

Overview

• The new administration’s policies have put the U.S. economy on a strong footing.
• An effective vaccine rollout has put the number of new COVID-19 cases on a firmly downward path.
• Unprecedented fiscal support is quickly restoring the economy back to full employment and generating positive outward spillovers to the world economy.
• These efforts have not been costless: the path for public debt is far higher; the current account deficit has grown; and very accommodative financial conditions have led to increased corporate and nonbank leverage and rising valuations across a range of assets.
• The pandemic continues to weigh heavily on those at the lower end of the income distribution, exposing longstanding inequities in access to quality healthcare and education (many of which have an important gender and racial dimension).

Economic outlook and policy implications

• Fiscal policy: unprecedented fiscal support is a primary driver of the rapid restoration toward full employment.
• Monetary and financial conditions: very accommodative financial conditions have contributed to increased corporate and nonbank leverage and rising asset valuations.
• External sector: the current account deficit has grown as part of the recent adjustment.
• Public finances: the path for public debt is far higher following pandemic-related measures.

Risks, imbalances, and distributional concerns

• Financial vulnerabilities:
  • Increased corporate leverage.
  • Increased nonbank leverage.
  • Rising valuations across a range of assets.
• External vulnerabilities:
  • A larger current account deficit.
• Distributional and social concerns:
  • Pandemic impact concentrated on those at the lower end of the income distribution.
  • Longstanding inequities in access to quality healthcare and education, with important gender and racial dimensions.

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