IMF Executive Board Concludes Article IV Consultation with the United States
IMF News, June 24, 2019
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- Published: June 24, 2019
Overview
- Date: June 24, 2019
- The U.S. economy is described as in the longest expansion in recorded history, with unemployment at levels not seen since the late 1960s.
- Economic activity is growing above potential, aided by a fiscal stimulus and supportive financial conditions.
- Real wages are rising, including for those at the lower end of the income distribution, and productivity growth appears to be recovering.
- Inflationary pressures remain remarkably subdued.
- Distributional and social concerns: average life expectancy is falling; income and wealth polarization have increased; poverty has fallen but remains higher than in other advanced economies; social mobility has steadily eroded.
- Medium-term risks highlighted: elevated vulnerabilities in leveraged corporates and potentially in the nonbank system; risks from an abrupt reversal of supportive financial market conditions; risks from deepening trade disputes; U.S. public debt-to-GDP ratio on an unsustainable path expected to continue rising throughout the medium-term as aging-related spending rises.
Executive Board Assessment
- Executive Directors welcomed continued robust performance and noted low unemployment, rising real wages, and subdued inflation.
- Economic prospects viewed as favorable with risks broadly balanced, but concerns include:
- Public debt on an unsustainable path.
- Continuing trade tensions and uncertainties.
- Rising medium-term risks to financial stability.
- Policy guidance emphasized:
- Continued vigilance, prudent macroeconomic policies, and supply-side reforms to secure strong, balanced, and inclusive growth and positive spillovers.
- Address external imbalances through fiscal adjustment and supply-side reforms to enhance productivity and competitiveness.
- Work constructively and cooperatively with trading partners to address distortions and resolve trade tensions to promote a more open, stable, and transparent rules-based international trade system.
- Ensure benefits of the strong economy are broadly shared; address rising income inequality and improve social outcomes.
- Encourage reforms in education, healthcare, and social programs, specifically recommending:
- Expanding the Earned Income Tax Credit.
- Providing family-friendly benefits.
- Improving healthcare coverage while tempering costs.
- Policy adjustments to lower the fiscal deficit and put public debt on a gradual downward path over the medium term, including:
- Consider options to better control entitlement spending.
- Raise indirect taxes.
- Create fiscal space to expand investments in infrastructure and human capital.
- Improve the budgetary process.
- Monetary policy: welcomed the Federal Reserve’s pause in interest rate adjustments and recommended deferring further increases in the federal funds rate until clearer signs of wage or price inflation; appreciated data-dependent approach and forward-looking communication; welcomed readiness to consider refinements following the Fed’s review.
- Financial sector: noted well-capitalized banks but building risks among leveraged corporations and possibly nonbanks; emphasized enhancing risk-based regulation and supervision, strengthening oversight of nonbanks, and addressing data gaps.
- Governance: welcomed voluntary participation in the Fund’s enhanced governance framework on supply and facilitation of corruption and encouraged improving entity transparency and beneficial ownership information.
Selected Economic Indicators (Percentage change from previous period, unless otherwise indicated)
- Projections and historical figures presented for 2018–2024. Key entries include:
- Real GDP: 2.9 (2018); 2.6 (2019); 1.9 (2020); 1.8 (2021); 1.7 (2022); 1.6 (2023); (2024 value not listed)
- Real GDP (q4/q4): 3.0 (2018); 2.3 (2019)
- Net exports 1/: -0.2 (2018); 0.2 (2019); 0.0 (2020)
- Total domestic demand: 2.4 (2018); 2.0 (2019); 1.5 (2020)
- Final domestic demand: 2.2 (2018); 2.1 (2019)
- Private final consumption: 1.2 (2018); 0.6 (2019)
- Public consumption expenditure: 1.0 (2018); 1.1 (2019); 0.8 (2020); 0.7 (2021)
- Gross fixed domestic investment: 4.8 (2018); 2.7 (2019)
- Private fixed investment: 5.2 (2018); 3.1 (2019)
- Public fixed investment: -0.1 (2018); 0.1 (2019)
- Change in private inventories 1/: (values not listed)
- Nominal GDP: 4.3 (2018); 4.0 (2019); 3.8 (2020); 3.7 (2021); 3.6 (2022)
- Personal saving rate (% of disposable income): 6.8 (2018); 6.5 (2019); 6.4 (2020); 6.3 (2021); 6.2 (2022)
- Private investment rate (% of GDP): 17.8 (2018); 18.1 (2019); 18.2 (2020); 18.3 (2021)
- Unemployment rate: 3.9 (2018); 3.5 (2019)
- Labor force participation rate: 62.9 (2018); 63.0 (2019); 62.7 (2020); 62.5 (2021); 62.3 (2022); 62.1 (2023)
- Potential GDP: (value not listed)
- Output gap (% of potential GDP): 1.4 (year not specified)
- CPI inflation (q4/q4): 2.5 (year not specified)
- Core CPI Inflation (q4/q4): (value not listed)
- PCE Inflation (q4/q4): (value not listed)
- Core PCE Inflation (q4/q4): (value not listed)
- GDP deflator: (value not listed)
- Federal balance (% of GDP) 2/: -3.9 (2018); -4.2 (2019); -4.0 (2020); -4.3 (2021); -4.1 (2022); -3.8 (2023)
- Federal debt held by the public (% of GDP): 77.8 (2018); 78.7 (2019); 79.6 (2020); 80.6 (2021); 82.0 (2022); 83.3 (2023); 84.2 (2024)
- General government budget balance (% of GDP) 2/: -5.3 (2018); -4.9 (2019); -4.6 (2020); -4.5 (2021)
- General government gross debt (% of GDP): 106.8 (2018); 107.9 (2019); 108.8 (2020); 109.9 (2021); 111.3 (2022); 112.4 (2023); 113.2 (2024)
- Interest rates (percent; period average) — Fed funds rate: 2.8 (period not specified)
- Three-month Treasury bill rate: 3.2 (period not specified)
- Ten-year government bond rate: (value not listed)
- Current account balance (% of GDP): -2.3 (2018); -2.1 (2019); -2.5 (2020); -2.7 (2021); -2.6 (2022); -2.4 (2023)
- Merchandise trade balance (% of GDP): (value not listed)
- Export volume (NIPA basis, goods): 4.7 (period not specified); 4.4 (subsequent period not specified)
- Import volume (NIPA basis, goods): 4.1 (period not specified)
- Net international investment position (% of GDP): -47.4 (2018); -47.5 (2019); -48.2 (2020); -49.1 (2021); -50.0 (2022); -50.7 (2023); -51.4 (2024)
- Gross national saving (% of GDP): 19.0 (2018); 19.3 (2019); 18.7 (2020); 18.8 (2021); 18.9 (2022)
- General government saving: -3.2 (period not specified); -2.2 (period not specified)
- Private saving (% of GDP): 22.2 (2018); 22.0 (2019); 21.3 (2020); 21.2 (2021); 21.5 (2022)
- Personal saving: 5.1 (period not specified); 4.9 (subsequent period not specified)
- Business saving: 17.1 (period not specified); 16.4 (subsequent period not specified); 16.7 (subsequent period not specified); 16.5 (subsequent period not specified)
- Gross domestic investment (% of GDP): 21.1 (2018); 21.4 (2019)
- Public investment: 3.3 (period not specified)
- Sources for indicators: BEA; BLS; FRB; Haver Analytics; and IMF staff estimates.
- Notes:
- 1/ Contribution to real GDP growth, percentage points.
- 2/ Includes staff's adjustments for one-off items, including costs of financial sector support.
IMF Communications Department, June 24, 2019.
