IMF sees solid US growth but warns rising deficits and debt heighten vulnerabilities.
Summary:
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IMF completes US Article IV review
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2026 growth seen at 2.4%
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Employment growth to slow structurally
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Unemployment near 4% in 2026–27
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Core PCE at 2% by early 2027
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Deficits seen at 7–8% of GDP
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Debt projected at 140% of GDP by 2031
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Current account gap 3.5–4% of GDP
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Fed credibility “highly valuable asset”
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Warns of disorderly portfolio shifts
The International Monetary Fund called on the United States to rein in large fiscal deficits, while forecasting steady economic growth and a gradual return of inflation to target.
In its Article IV review, the IMF projected US growth of 2.4% in 2026, in line with its January World Economic Outlook, and said the unemployment rate should remain close to 4% through 2026–27. However, it warned that employment growth is likely to slow to less than half its pre-pandemic pace, reflecting weaker population growth.
Inflation is expected to ease only gradually, with core PCE reaching the Federal Reserve’s 2% target in early 2027. The Fund noted that tariff pass-through to consumer prices could be lower than assumed, potentially allowing more front-loaded disinflation and firmer activity. At the same time, ongoing trade uncertainty could weigh on growth.
The IMF underscored rising fiscal vulnerabilities, projecting US deficits in the 7–8% of GDP range in coming years — more than double levels targeted by Treasury Secretary Scott Bessent. Consolidated general government debt is forecast to climb to 140% of GDP by 2031.
Externally, the current account deficit is expected to remain large at 3.5–4% of GDP, supported by non-resident financial inflows and rising external borrowing
