IMF Says US in Longest Expansion since 167 Years, as Unemployment Rate Falls 4.4%

 (Photo credit should read TIM SLOAN/AFP/Getty Images)

July 27, 2017

By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-Global financial institution, the International Monetary Fund (IMF) said on Thursday that the United States (US) is in its longest expansion since 1850, as the unemployment rate falls 4.4 percent and job growth continues to be strong, according to its latest Article IV Consultation.

“The economy has gone through a temporary growth dip in the early part of this year but momentum has picked up and the economy is expected to grow at 2.1 percent this year and next, modestly above potential, supported by solid consumption growth and a rebound in investment,” the IMF said.

The IMF says labour market indicators suggest that the economy could be effectively at full employment and inflation has remained subdued and, indeed, has weakened moderately in recent months.

It reported that wage indicators have shown a modest acceleration. Over the next 12–18 months personal consumer expenditure (PCE) inflation is expected to slowly rise above 2 percent, before returning to the Federal Reserve’s medium-term target of 2 percent.

The global financial institution in its assessment commended the strong performance of the U.S. economy, including a rebound in growth, improved consumer confidence, low unemployment, and steady job increases.

They noted that the favourable near-term outlook is clouded by important medium-term challenges, including rising public debt, potential growth below historical averages, declining labor force participation, and income growth that is not broadly shared.

According to the IMF, the US economy is close to full employment and inflation is near the Federal Reserve’s price stability mandate of 2 percent.

The Fund advised that medium-term challenges will require measures such as reforms which should include building a more efficient tax system; establishing a more effective regulatory system; raising infrastructure spending; improving education and developing skills; strengthening healthcare coverage while containing costs; offering family-friendly benefits; maintaining a free, fair, and mutually beneficial trade and investment regime; and reforming the immigration and welfare systems.