From <a href="https://www.zerohedge.com/"Zero Hedge
IMF Slashes US GDP Outlook, Hikes Unemployment Forecast, Sees Miracle In Inflation
Less than a month after The International Monetary Fund cut its growth projections for the US economy to 2.9%, the Washington-based lender doubled-down in its so-called Article IV consultation released tonight, slashing US GDP growth to just 2.3% this year and just 1.0% in 2023 (down from +1.7% in June)…
The IMF now also sees the jobless rate at 3.7% this year, compared with staff’s earlier 3.2% forecast, and expects the figure to exceed 5% in both 2024 and 2025.
Finally, we come to The IMF’s inflation forecast. It appears they are convinced that The Fed is omnipotent – able to manufacture a massive bout of disinflation without any annual economic contraction and only modest job losses.
The table below shows the cliff-like plunge in inflation starting 2023 (and expectations that 2022 will actually slow from 2021 for all but Core CPI)…
We are not surprised at this forecast since IMF Directors warned:
“a broad-based surge in inflation, posing systemic risks to both the United States and the global economy.”
This will not help the global stagflation outlook at all…
The US’s “policy priority must be to expeditiously slow price growth without precipitating a recession,” the IMF’s executive directors said.
Avoiding a recession in the US “is becoming increasingly challenging,” with the Russian invasion of Ukraine, the lingering Covid-19 pandemic and supply-side constraints create additional difficulties, they said.
The Biden administration won’t like this:
As part of the policy mix, a number of Directors also saw merit in implementing a medium-term strategy for fiscal deficit reduction, which would help place public debt on a downward path and support anchoring inflation expectations.
Easier said than done!