IMF Sees US Economy Thriving, but Tariffs and Debt Pose Risks
A “buoyant” US economy is set to experience accelerated growth and reduced unemployment this year. However, significant federal budget debts “represent a growing stability risk,” the International Monetary Fund stated on Wednesday. The assessment of the world’s largest economy by the 191-country lending organization was largely favorable. The IMF projected that US gross domestic product – the country’s output of goods and services – would grow by 2.4 percent in the fourth quarter of 2026 compared to the last three months of 2025, an increase from the 2.2 percent growth recorded the previous year.
It projects US unemployment decreasing from 4.5 percent in late 2025 to 4.1 percent in 2026, with inflation expected to reach the Federal Reserve’s 2 percent target by 2027. IMF managing director Kristalina Georgieva stated that the Fed, having reduced its benchmark interest rate three times in 2025, has the capacity to lower it to approximately 3.4 percent from the current 3.6 percent. However, she stated that it should refrain from implementing deeper cuts unless there is a “material worsening” in the American job market.
Strong productivity growth has provided assistance to the United States. However, Georgieva stated that the US economy would have achieved even greater performance without the significant taxes on foreign imports imposed by President Donald Trump. The fund’s report cautioned that the president’s protectionist trade policies “could represent a larger-than-expected drag on activity.” The IMF has voiced apprehension regarding the federal government’s debts, which it anticipates will increase consistently from just below 100 percent of US GDP last year to nearly 110 percent by 2031.
