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Spending Cuts Are a Burden on U.S. Economy: IMF

June 14, 2013
spending cuts

Spending cuts implemented by the US government are slowing the growth of the world's largest economy, the IMF said Friday in its annual report on the US economy.

The IMF projects US economic growth of 1.9 per cent this year, unchanged from its April estimate. That rate would be lower than last year's 2.2-per-cent growth rate.

Automatic across-the-board spending cuts that went into effect in March to lower the US government debt were poorly conceived, the IMF said in its annual report.

Economists at the IMF singled out the cuts for criticism, saying they are not only a heavy burden in the short term, but that they also might slow down growth in the medium term by lowering investment in education, scientific research and infrastructure.

The IMF report states that, overall, there are signs that the US economy is improving, citing rising housing prices, growth in construction starts, a better picture in unemployment and household finances and positive company results.

The IMF predicts growth of 2.7 per cent in 2014 and more than 3 per cent a year in the 2015-17 period. It also predicts a corresponding drop in the unemployment rate over the next few years.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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