IMF Trims US Growth Forecast to 2.3% for 2022 as Consumer Spending Slows

The International Monetary Fund (IMF) trimmed its US growth projection for 2022 to 2.3% on Tuesday, less than a month after lowering it to 2.9% in late June in response to recent data indicating a decline in consumer spending.

The Fund also reduced its 2023 real GDP growth outlook to 1.0% from 1.7% in June.

The IMF’s executive directors said in a statement that the US had “recovered rapidly” from the pandemic shock due to the unprecedented monetary and fiscal policy support. However, the IMF also pointed out that the speedy recovery is accompanied by a “broad-based surge in inflation,” which poses “systemic risks” to the economies of the United States and the rest of the world.

The Fund predicted that inflation will drop to 1.9% by the end of 2023 due to tighter Fed monetary policy, down from a forecast of 6.6% for the fourth quarter of 2022.

Though this would further slow economic expansion in the US, the IMF maintains its forecast that the country will avoid recession.

Inflation in the United States grew faster than expected in June 2022, reaching 9.1% YoY and exceeding the prediction of an 8.8% increase.

Excluding food and energy, core inflation fell to 5.9% YoY in June, but was still higher than the 5.7% forecast.