WASHINGTON–The International Monetary Fund has its forecast for the U.S. economy to 2.1% from 2.3% for 2017. It also reduced its projection for U.S. growth in 2018 to 2.1%, from 2.5%.
The reduction is the result of removing assumptions around President’s Trump’s plans for tax cuts and increased infrastructure spending.
The IMF said it believes the United States will be challenged to meet Trump’s target annual growth rate of 3% as problems ranging from an aging population to low productivity growth remain in place, and with a labor market already back at full employment.
The IMF said it has doubts that much of the president’s policy agenda will ever be enacted. “We have removed the assumed fiscal stimulus from our forecast,” Alejandro Werner, director of the IMF’s Western Hemisphere Department, said during a press briefing.
It added in a press release that even with an “ideal constellation of pro-growth policies, the potential growth dividend is likely to be less than that projected in the budget and will take longer to materialize.”
Noting the U.S. is enjoying its third-longest expansion since 1850, it nevertheless forecast that economic growth will decline to 1.9% in 2019 and 1.8% in 2020.
In response, the U.S. Treasury issued a statement that, “We are focused on making significant reforms to our tax and regulatory policies, as well as renegotiating trade agreements to be more balanced for American workers, which will lead to stronger economic growth and job creation.”