IMF Staff Country Reports

This 2023 Article IV Consultation highlights that the US economy has proven resilient in the face of the significant policy tightening that took place in 2022. Consumer demand has held up particularly well, boosted initially by a drawdown of pent-up savings and, more recently, by solid growth in real disposable incomes. The strength of demand and in labor market outcomes has contributed to a persistent inflation problem. While goods inflation has moderated and shelter price growth is expected to slow in coming months, nominal wage increases are feeding into non-shelter services prices. Fiscal policy is expected to be procyclical in 2023 on a general government basis, following a significant fiscal contraction in 2022 due to the unwinding of major pandemic related fiscal measures and higher tax receipts. The Federal Reserve provided systemic liquidity support, including a new facility to reduce the need for banks to liquidate assets in times of stress. These actions have stabilized deposit outflows and restored confidence to the banking system.