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The positive effects of unprecedented policy stimulus, combined with the advantages of a highly flexible economy, have resulted in the US unemployment rate getting back to end-2019 levels, according to the International Monetary Fund (IMF), which said US output is now close to its pre-pandemic trend and wages have increased rapidly for lower income workers.
Poverty has fallen and 8.5 million jobs have been created since the end of 2020, said the IMF executive board, which concluded the Article IV consultation with the United States recently.
The positive effects of unprecedented policy stimulus, combined with the advantages of a highly flexible economy, have resulted in the US unemployment rate getting back to end-2019 levels, according to the International Monetary Fund (IMF), which said US output is now close to its pre-pandemic trend and wages have increased rapidly for lower income workers.
However, the rapid recovery of demand and associated depletion of slack, rising energy prices and ongoing global supply disruptions have led to a significant acceleration in inflation, IMF noted.
Wage and price pressures are broad-based had have spread quickly across the economy. Longer-run measures of inflation expectations have started to drift higher and shorter horizon measures of inflation expectations have increased significantly.
During the pandemic, the overall general government deficit rose by close to 9 per cent of gross domestic product (GDP) with the $1.9 trillion American Rescue Plan—passed in March 2021—slowing the pace of fiscal contraction in 2021-22 but not forestalling it, IMF said in a release.
The fiscal deficit is now declining rapidly but, despite this, public debt is markedly higher than its pre-pandemic levels and is expected to continue to rise as a share of GDP over the medium term.
Fibre2Fashion News Desk (DS)
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