IMF Staff Country Reports

This 2022 Article IV Consultation discusses that the United States (U.S.) has recovered quickly from the pandemic shock. The US economy has staged a strong recovery from the coronavirus disease 2019 (COVID-19) shock. The positive effects of unprecedented policy stimulus, combined with the advantages of a highly flexible economy, have been clear. Just over two years after the COVID-19 shock, the unemployment rate and other measures of labor force underutilization have returned to end-2019 levels and output is close to its pre-pandemic trend. The Federal Open Market Committee’s decision at its June meeting—to raise rates by 75 basis points and provide forward guidance around a path for the federal funds rate that peaks at close to 4 percent—strikes the right balance. This policy path should serve to create the up-front tightening of financial conditions that will be necessary to quickly bring inflation back to target. More determined action is needed to achieve the administration’s climate goals and to facilitate a smooth, speedy transition to a low carbon economy.