The International Monetary Fund warned that the United States faces increasing risks of economic contraction, with a "narrow path" to avoid recession, and it has lowered its growth forecast for the U.S. economy. In its review of the U.S. economy, the fund downgraded its growth predictions to 2.9% for the current year, down from the 3.7% forecast announced in April, and it expects growth to slow to 1.7% next year.
IMF Managing Director Kristalina Georgieva stated that "with inflation rising sharply and the Federal Reserve raising interest rates, the United States faces increasing risks of economic contraction." Despite expressing confidence that interest rate hikes will reduce inflation, she remarked, "We recognize that there is a narrow path to avoiding recession."
She pointed out several shocks the U.S. economy has faced, noting that "more negative shocks will inevitably make the situation more challenging." The Federal Reserve implemented its largest increase in the benchmark lending rate in nearly 30 years last week as part of its measures to curb inflation, which has reached its highest level in four decades, adding pressure on American households struggling with rising gasoline, food, and housing costs.
