## Opening Remarks by IMF Managing Director Christine Lagarde At the United States 2019 Article IV Press Conference

_IMF News, June 6, 2019_

## Source details

**Canonical URL:** [Opening Remarks by IMF Managing Director Christine Lagarde At the United States 2019 Article IV Press Conference](https://www.imf.org/en/news/articles/2019/06/06/sp060619-lagarde-opening-remarks-us-2019-article-iv-press-conference)

## Other formats

- [Markdown version](/en/news/articles/2019/06/06/sp060619-lagarde-opening-remarks-us-2019-article-iv-press-conference/index.md)
- [Structured JSON version](/en/news/articles/2019/06/06/sp060619-lagarde-opening-remarks-us-2019-article-iv-press-conference/index.json)
- [Bundle manifest](/en/news/articles/2019/06/06/sp060619-lagarde-opening-remarks-us-2019-article-iv-press-conference/bundle-manifest.json)

## Bibliographic details
- Published: June 6, 2019

---

### Macroeconomic outlook and key statistics
- The U.S. economy will be in the longest expansion in recorded history.
- Our expectation is that economic activity will grow by 2.6 percent this year and 1.9 percent in 2020.
- This represents an increase in our 2019 growth forecast by around 0.3 percentage points.
- Unemployment is at levels not seen since the late 1960s.
- Wages and household incomes are rising while inflationary pressures in the U.S. remain very subdued.

### Distributional and social outcomes
- Despite strong macroeconomic outcomes, benefits from the decade-long expansion have generally not been shared as widely as they could have been.
- Social indicators highlighted as challenging:
  - Average life expectancy has trended downward in recent years.
  - Income and wealth polarization have increased.
  - Social mobility has steadily eroded.
  - Education and health outcomes are suboptimal.
  - The poverty rate is falling but remains higher than in other advanced economies.
- Policy measures emphasized to promote inclusive growth and support social mobility:
  - Instituting paid family leave.
  - Expanding the very effective Earned Income Tax Credit.
  - Helping working families with child and dependent care.

### Fiscal sustainability and policy options
- The U.S. public debt is on an unsustainable path; policy adjustments are needed to lower the fiscal deficit and put public debt on a gradual downward path over the medium term.
- Possible policy elements for a successful package (as stated):
  - Steps to address the expected increases in entitlement spending on health and social security.
  - To raise indirect taxes.
  - To institute a federal carbon tax.

### Financial market risks and spillovers
- Financial market conditions improved markedly over the first few months of this year, supporting near-term growth by reducing the cost and increasing access to financing.
- Concern noted that an abrupt reversal of financial market conditions could represent a material downside risk to the U.S.
  - A sudden tightening of financial conditions could interact adversely with the high levels of corporate and public debt and create a feedback loop that would weigh on real activity and job creation.
  - Such a shift would also have negative outward spillovers for corporates, sovereigns and financial institutions in other countries, particularly those with significant leverage or rollover needs in U.S. dollars.

### Monetary policy stance
- The Federal Reserve indicated earlier this year it was pausing its process of raising interest rates; the IMF fully agrees with that approach.
- The pause should give policymakers time to gauge the balance of risks to both inflation and employment outcomes and to build a clearer picture of whether further adjustments in the federal funds rate are warranted.
- It is important for the Federal Reserve to remain data dependent and to continue to communicate well about its assessment of evolving economic conditions and its expectations for future monetary policy.

### Trade and external relations
- For the global economy to function well it needs a more open, more stable, and more transparent, rules-based international trade system.
- Essential that the U.S. and its trading partners work constructively together to better address distortions in the trading system.
- Trade tensions between the U.S. and its trading partners including China and Mexico represent a threat to the global outlook and create important negative spillovers to other countries.
- These tensions should be quickly resolved through a comprehensive agreement that results in a stronger and more integrated international trading system.
- "Nobody wins a trade war."

### Other priorities
- Highlighted bipartisan priority: the Federal, state and municipal governments' work to tackle the current opioid crisis in the U.S., noting the tragic human costs and the absence of easy solutions.

*As prepared for delivery, June 6, 2019*

---


## References

- [Christine Lagarde](https://www.imf.org/en/About/senior-officials/Bios/christine-lagarde)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/06/06/sp060619-lagarde-opening-remarks-us-2019-article-iv-press-conference_