{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with the United States",
  "publication": "IMF News, July 22, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/07/22/pr21224-united-states-imf-executive-board-concludes-2021-article-iv-consultation",
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  "summary": "The Executive Board concluded the Article IV consultation with the United States on July 19, 2021.",
  "publishDate": "2021-07-22",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Executive Board concluded the Article IV consultation with the United States on July 19, 2021.\n- The U.S. pandemic resulted in close to 600,000 deaths.\n- New cases of COVID-19 and the test positivity rate fell significantly in 2021, aided by mask mandates, social distancing, shut down orders, and over half the eligible population being fully vaccinated.\n- The receding case numbers are expected to allow normal activities to resume and provide a substantial economic boost."
    },
    {
      "heading": "Economic outlook and near-term dynamics",
      "content": "- The U.S. economy is expected to grow by around 7 percent in 2021 as:\n  - savings are drawn down,\n  - demand shifts back to in-person services,\n  - depleted inventories are rebuilt.\n- Disruptive supply and demand mismatches are possible as the economy normalizes, including in the labor market, but these are expected to be transitory.\n- The significant employment gap should help contain wage and price pressures."
    },
    {
      "heading": "Policy support underpinning the recovery",
      "content": "- Fiscal support:\n  - The American Rescue Plan (adopted March 2021) contained 8.2 percent of GDP in federal spending, in addition to the December fiscal package.\n  - Fiscal support included extensions for small businesses, expanded unemployment insurance, and household transfers via stimulus checks.\n  - These packages supported demand, helped avoid corporate bankruptcies, and relieved financial stress on households and state and local governments.\n- Monetary policy:\n  - The Federal Reserve committed to allow inflation to overshoot the 2 percent target in the near term.\n  - This facilitated accommodative monetary policy amid low neutral rates and provided clear forward guidance tied to actual inflation outcomes and inflation expectations."
    },
    {
      "heading": "Administration policy proposals and fiscal outlook",
      "content": "- The American Jobs Plan and American Families Plan propose:\n  - redistributing resources toward vulnerable households,\n  - investing in infrastructure,\n  - incentivizing human capital accumulation and labor force participation,\n  - improving productivity,\n  - reducing carbon emissions and increasing climate resilience.\n- Proposed revenue measures include:\n  - higher statutory corporate tax rate,\n  - a global minimum tax,\n  - increases in the top marginal rate of personal income tax,\n  - increases in the rate high income earners pay on capital gains.\n- On a net basis, the Administration’s fiscal plans would leave federal government debt 3¼ percent of GDP higher at end-2030."
    },
    {
      "heading": "Executive Board assessment: key findings",
      "content": "- Directors agreed with the thrust of the staff appraisal and welcomed pandemic control efforts and strong policy support.\n- Noted costs and vulnerabilities:\n  - Significant increase in public debt.\n  - Widening current account deficit.\n  - Increased corporate and nonbank leverage with rising asset valuations.\n  - Pandemic’s heavy toll on low income households.\n- Outlook caveats:\n  - Outlook subject to evolution of the pandemic and congressional adoption of proposed fiscal measures."
    },
    {
      "heading": "Executive Board recommendations and policy priorities",
      "content": "- Fiscal policy:\n  - Policy adjustments necessary to lower the fiscal deficit and put public debt on a gradual downward path over the medium term.\n  - Consider raising revenues, including through a carbon tax, higher taxation of fuels, and a broad-based federal consumption tax.\n  - Lessen the impact of an aging demographic on future spending.\n  - Better targeting of spending to strengthen macroeconomic and distributional outcomes and trigger larger boosts to aggregate supply.\n- Tax policy and administration:\n  - Welcomed proposals to increase taxes on corporates and high-income households, close tax loopholes, remake the international corporate tax system, and increase resources for the Internal Revenue Service.\n- Monetary policy and communication:\n  - Noted Federal Reserve actions were highly effective; endorsed near-term overshooting of the two-percent inflation target under the new framework.\n  - Urged the Fed to communicate well in advance to ensure orderly and transparent withdrawal of asset purchases and monetary accommodation.\n- Financial stability and market structure:\n  - Systemic financial stability risks appear close to the historical average, but pandemic revealed shortcomings in stress functioning of systemically important U.S. markets and institutions.\n  - Urged serious consideration of structural changes in the operation of the Treasury market, key money markets, and prime money market funds.\n- External sector and trade:\n  - Noted the current account deficit increased during the pandemic and the external position is weaker than implied by medium-term fundamentals and desirable policies.\n  - Urged the authorities to roll back trade restrictions and tariff increases and avoid currency-related trade responses.\n  - Encouraged constructive U.S. engagement with trading partners to strengthen the rules-based multilateral trading system."
    },
    {
      "heading": "Procedural note",
      "content": "- It is expected that the next Article IV consultation with the United States will be held on the standard 12-month cycle."
    },
    {
      "heading": "United States: Selected Economic Indicators (Projections)",
      "content": "- Real GDP (annual growth)\n  - 2019: 2.2\n  - 2020: -3.5\n  - 2021: 7.0\n  - 2022: 4.9\n  - 2023: 1.9\n  - 2024: 1.7\n- Real GDP (q4/q4)\n  - 2019: 2.3\n  - 2020: -2.4\n  - 2021: 8.0\n  - 2022: 2.8\n  - 2023: 1.8\n- Unemployment rate (q4 avg.)\n  - 2019: 3.6\n  - 2020: 6.8\n  - 2021: 4.4\n  - 2022: 3.1\n  - 2023: 3.0\n  - 2024: 3.2\n  - 2025: 3.4\n- Current account balance (% of GDP)\n  - 2019: -2.2\n  - 2020: -3.1\n  - 2021: -3.8\n  - 2022: -3.6\n  - 2023: -3.4\n  - 2024: -3.0\n  - 2025: -2.7\n  - 2026: -2.5\n- Fed funds rate (end of period)\n  - 2019: 0.1\n  - 2020: 0.2\n  - 2021: 0.7\n  - 2022: 1.4\n  - 2023: 2.1\n- Ten-year government bond rate (q4 avg.)\n  - 2019: 0.9\n  - 2020: 2.4\n  - 2021: 2.7\n- PCE Inflation (q4/q4)\n  - 2019: 1.5\n  - 2020: 1.2\n  - 2021: 4.3\n  - 2022: 2.0\n- Core PCE Inflation (q4/q4)\n  - 2019: 1.6\n  - 2020: 3.7\n  - 2021: 2.6\n  - 2022: 2.5\n- Federal fiscal balance (% of GDP)\n  - 2019: -4.6\n  - 2020: -14.9\n  - 2021: -15.1\n  - 2022: -8.0\n  - 2023: -5.7\n  - 2024: -4.8\n  - 2025: -4.5\n- Federal debt held by the public (% of GDP)\n  - 2019: 79.2\n  - 2020: 100.1\n  - 2021: 104.9\n  - 2022: 103.6\n  - 2023: 105.8\n  - 2024: 106.6\n  - 2025: 107.3\n\nIMF Executive Board Concludes 2021 Article IV Consultation with the United States, Press Release No. 21/224 (July 22, 2021).\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- IMF COVID-19 Hub\n- Policy Tracker\n- Financial Assistance\n- Questions & Answers\n- United States and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/07/22/pr21224-united-states-imf-executive-board-concludes-2021-article-iv-consultation"
    }
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    "Published: July 22, 2021",
    "The Executive Board concluded the Article IV consultation with the United States on July 19, 2021.",
    "The U.S. pandemic resulted in close to 600,000 deaths.",
    "New cases of COVID-19 and the test positivity rate fell significantly in 2021, aided by mask mandates, social distancing, shut down orders, and over half the eligible population being fully vaccinated.",
    "The receding case numbers are expected to allow normal activities to resume and provide a substantial economic boost.",
    "The U.S. economy is expected to grow by around 7 percent in 2021 as:",
    "Disruptive supply and demand mismatches are possible as the economy normalizes, including in the labor market, but these are expected to be transitory.",
    "The significant employment gap should help contain wage and price pressures.",
    "Fiscal support:",
    "Monetary policy:",
    "The American Jobs Plan and American Families Plan propose:",
    "Proposed revenue measures include:",
    "On a net basis, the Administration’s fiscal plans would leave federal government debt 3¼ percent of GDP higher at end-2030.",
    "Directors agreed with the thrust of the staff appraisal and welcomed pandemic control efforts and strong policy support.",
    "Noted costs and vulnerabilities:",
    "Outlook caveats:",
    "Fiscal policy:",
    "Tax policy and administration:",
    "Monetary policy and communication:",
    "Financial stability and market structure:",
    "External sector and trade:",
    "It is expected that the next Article IV consultation with the United States will be held on the standard 12-month cycle.",
    "Real GDP (annual growth)",
    "Real GDP (q4/q4)",
    "Unemployment rate (q4 avg.)",
    "Current account balance (% of GDP)",
    "Fed funds rate (end of period)",
    "Ten-year government bond rate (q4 avg.)",
    "PCE Inflation (q4/q4)",
    "Core PCE Inflation (q4/q4)",
    "Federal fiscal balance (% of GDP)",
    "Federal debt held by the public (% of GDP)",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[IMF COVID-19 Hub](https://www.imf.org/en/Topics/imf-and-covid19)",
    "[Policy Tracker](https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19)",
    "[Financial Assistance](https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker)",
    "[Questions & Answers](https://www.imf.org/en/About/FAQ/imf-response-to-covid-19)",
    "[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)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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