IMF Downgrades US Growth Projection, US Retail Sales Prove Resilient
The International Monetary Fund said the US economy is set to cool compared to previous projections, and that it’s piling up debt.

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The IMF isn’t the first to count out the US economy. How’s that worked out so far?
The International Monetary Fund said Tuesday that the US economy is set to cool compared to previous projections, and that America’s piling up debt at “concerning” levels. Meanwhile, US retail spending beat projections, suggesting resilient consumers are nevertheless poised to keep boosting growth prospects.
Fiery Spending Amid Signs of Cooling
The IMF’s latest World Economic Outlook said US economic growth would rise to 2.6% this year, up from 2.5% in 2023 but a downgrade from the previous 2.7% projection. “The United States shows increasing signs of cooling, especially in the labor market, after a strong 2023,” wrote IMF chief economist Pierre-Olivier Gourinchas in the report.
“It is concerning that a country like the United States, at full employment, maintains a fiscal stance that pushes its debt-to-GDP ratio steadily higher, with risks to both the domestic and global economy,” he added, although at a press conference after the report’s release he clarified the IMF sees no immediate “vulnerability” with the US. The US federal debt has consistently risen since 2001 and, as of last year, sat at 123% of GDP. At the same time, a report by the US Commerce Department brought encouraging news:
- US retail sales were flat in June, beating Wall Street projections of a 0.4% decline. Retail sales in May were revised up to an increase of 0.3%, better than the previously reported 0.1% — consumer spending, which accounts for two-thirds of the economy, is now predicted to have grown 2% year-over-year in the second quarter, besting the previous 1.5% forecast.
- Markets responded to the news with aplomb: The Dow Jones Industrial Average rose 1.8%, the small-cap Russell 2000 rose 3.4%, and the S&P 500 rose 0.6%.
At Your Service: The IMF said global inflation will fall to 5.9% this year from 6.7% in 2023, but cautioned services remain costly and could extend the conditions central bankers are waiting on before deploying rate cuts. “Unless goods inflation declines further, rising services prices and wages may keep overall inflation higher than desired,” wrote Gourinchas.