GLOBALMAXIM: RECOVERY of U.S. ECONOMY: INTERNATIONAL MONETARY FUND: IMF

WorldLeadersTV: RECOVERY in U.S. ECONOMY: INTERNATIONAL MONETARY FUND: IMF MaximsNewsNetwork: 26 July 2013: International Monetary Fund: IMF: Washington, DC - In its annual assessment of the U.S. economy, the International Monetary Fund says that there are signs that the U.S. recovery is taking hold: "There are signs that the U.S. economy is finally moving in the right direction. Stock prices have soared. And house prices especially have been increasing, and that's essential for the U.S. families, for American families, to rebuild their wealth and to spend more, which, of course, is going to be very important for a stronger pace of job creation going forward," said Roberto Cardarelli, the IMF's mission chief to the U.S. Despite some improvements in economic indicators, particularly in the housing market, the very rapid pace of deficit reduction (including automatic spending cuts known as the sequester) is slowing growth, the IMF said. U.S growth is expected to slow to 1.7 percent in 2013, from 2.2 percent in 2012. This projection reflects the impact of the sequester, and the expiration of the payroll tax cut and the increase in tax rates for high-income taxpayers. Growth could pick up to 2.7 percent next year with a more moderate fiscal adjustment and a further strengthening of the housing market, the IMF said. According to the IMF, the main policy challenge is to support the recovery, while addressing the vulnerabilities that threaten growth, public finances, and financial stability in the medium term. "What it's missing right now is a plan that stabilizes public debt and keeps it from increasing further over the next several years. However, we think that the pace of fiscal -- of the reduction of the fiscal deficit this year has been too fast, especially through the implementation of the so-called sequester, the automatic spending cuts, that we think are going to be felt in the economy especially this fall. Going forward, what's still missing is a comprehensive package that includes both higher revenues and lower spending, lower growth in entitlement spending over the next several years," Cardarelli said. In its assessment, the IMF emphasized a fiscal policy strategy to deal with this challenge, including the need to repeal the sequester and adopt a more balanced and gradual pace of fiscal consolidation. The Fund said the spending cuts not only reduce growth in the short term, but the arbitrary reductions in education, science, and infrastructure spending could also reduce future potential growth. The Fund also called on the U.S. to raise the debt ceiling to avoid a severe shock to the United States and the global economy, and to adopt a comprehensive and back-loaded set of measures to restore long-run fiscal sustainability. The IMF also stressed the importance of monetary policy saying there is no need to rush to exit the Fed's monthly $85 billion bond-buying program. But the IMF underscored the need to plan and manage a gradual and orderly tapering of the purchases, while monitoring financial stability risks. While the U.S. Federal Reserve has a range of tools to help manage the scaling back, effective communication on its plans and careful timing will be critical to avoid excessive volatility in long-term interest rates as the exit nears. "We think that the policies that the Federal Reserve has adopted over the last few years, including the purchase of large volume of assets and communicating to markets that interest rates are going to remain very low until conditions in labor markets are normalized, have been tremendously helpful to sustain the recovery, and they play the role behind acceleration of demand that we have been seeing over the last few months, especially in the housing market. Now, going forward, we share the authorities' view that the normalization of monetary policy condition should be attuned to the progress in the recovery and especially to the progress in labor markets," Cardarelli said. INTERNATIONAL MONETARY FUND: IMF MaximsNewsNetwork®™ & WorldLeadersTelevision™ News Network for the United Nations and the International Community™ "GIVING POWER & RESONANCE TO THE VOICE OF THE INTERNATIONAL COMMUNITY" ™ See: http://www.MaximsNews.com See: http://www.WorldLeadersTV.com ASIA100TVNet™ ASIATV100Net™ MAGNUMMAXIM™ TodaysNetworkNews™ WORLDMAGNUM™ GLOBALMAXIM™ TODAYSNETNEWS™ NewsNetworkToday™ NetworkNewsToday™ MaximsNewsEconomics™ MaximsNewsWorld™ MaximsNewsGlobal™ MaximsNewsGreen™ MaximsNewsWater™ MaximsNewsPeople™