Washington, June 22 (IANS) The International Monetary Fund said Wednesday that it has revised its projection for US economic growth this year from 2.4 percent to 2.2 percent.
“The United States economy is, overall, in good shape. A total of 2.4 million new jobs were created over the past year and unemployment has fallen to 4.7 percent,” the IMF says in its latest review of the world’s largest economy.
At the same time, the IMF cited “significant longer-term challenges to strong and sustained growth,” notably the widening of income inequality and a poverty rate of nearly 15 percent, which represents 46.7 million Americans living in poverty, EFE reported.
Given statistics indicating a slowing of economic activity and the persistence of global uncertainty, the IMF said, “there is a clear case (for the US Federal Reserve) to proceed along a very gradual upward path” regarding interest rates.
The IMF report praised the Fed’s decision last week to leave its benchmark federal-funds rate in the current target range of 0.25 percent to 0.5 percent.
In a press conference to present the report, IMF Managing Director Christine Lagarde referred to the shrinking of the workforce, declining productivity, burgeoning inequality and the high level as “four forces” that could limit US economic growth.
“Not only does poverty create significant social strains, it also eats into labor force participation, and undermines the ability to invest in education and improve health outcomes,” she said.
To address the “four forces”, Lagarde advocated measures such as reforming the immigration system, boosting the federal minimum wage and the provision of paid family leave.
“I would just note that the US is the only country among advanced economies without paid maternity leave at the national level and US female labor force participation is 12 percent lower than that for men,” the IMF chief said.