IMF reduces U.S. growth outlook forecast

|By:, SA News Editor

The International Monetary Fund has cut its 2014 U.S economic growth forecast to 2% from the 2.8% it predicted in April, due to a weak first quarter. A harsh winter, struggling housing market and weak international demand for the country's products have all attributed to the economy's contraction in Q1. However, the fund has maintained its 3% growth outlook for 2015, stating a "meaningful economic rebound is under way."

Markets are expecting the Federal reserve to start raising rates in the middle of next year, although the IMF related that it is not certain that it will be the case. Rates have been near zero since late 2008.

Issuing a warning, the IMF declared, "The U.S. must cut spending and raise revenue in the long term to avoid public debt overwhelming the country's finances," and also cautioned regarding unemployment risk. To boost more people into the workforce, the organization suggests increasing near-term spending on infrastructure, education, job training and child-care subsidies.