IMF Staff Country Reports

The 2024 Article IV Consultation highlights that the US economy has turned in a strong performance over the past few years. Hysteresis effects from the pandemic did not materialize and both activity and employment now exceed pre-pandemic expectations. Real incomes were diminished by the unexpected rise in inflation in 2022 but have now risen above pre-pandemic levels. Job growth has been particularly fast with 16 million new jobs created since end-2020. However, income and wealth gains have been uneven across the income distribution and poverty remains high, particularly following the expiration of pandemic-era support. Despite the important progress in returning inflation toward its 2 percent goal, the Federal Reserve should wait to reduce its policy rate until at least late 2024. With the economy humming along at an impressive rate the US has not paid a high cost to current monetary policy settings. The evidence suggests that the US economy has largely returned to balance. Labor markets imbalances have been mostly resolved with the economy now appearing to be operating slightly above maximum employment.