- Egypt rights center raided, 2 Mubaraks acquitted
- New Mexico Supreme Court rules same-sex marriage constitutional
- Blame Bush: 5 years later, that’s still the mantra, pollsters find
- Dutch prostitutes demand same retirement benefits as soccer stars
- John McCain to Harry Reid: I’ll ‘kick the crap’ out of you
- Dogs that talk: Researchers seek $10K for ‘No More Woof’ technology
- 1,000 firefighters called to battle stubborn Big Sur wildfire
- Black Friday brouhaha: Millions of Target shoppers hit by credit card theft
- Britain orders airplane to rescue citizens from violent South Sudan
- Mega Millions winner emerges as Georgia mom, in ‘disbelief’
IMF warns of ‘dangerous’ phase of economic decline
Report implores policymakers to act
Question of the Day
“Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing,” said in the report, which was released prior to the IMF’s annual meetings this week.
In its “World Economic Outlook,” the IMF steeply downgraded projections it made in June regarding the U.S. economy. The international lending organization had predicted a growth of 2.5 percent in 2011 and 2.7 percent in 2012. In just three months, the forecast has changed to 1.5 percent in 2011 and 1.8 percent in 2012.
Even to meet those levels of growth, the U.S. economy would need to expand at a much faster rate in the second half of this year than the 0.7 percent rate of the first six months.
“The global economy has entered a dangerous new phase,” said Olivier Blanchard, the IMF’s chief economist. “The recovery has weakened considerably. Strong policies are needed to improve the outlook and reduce the risks.”
The U.S. faces longer-lasting problems that go beyond skyrocketing gas prices and effects caused by the earthquake and tsunami in Japan, the IMF said. Employers aren’t hiring or raising pay. Many homeowners owe more on their mortgages than their properties are worth. All these trends are holding back consumer spending and are reasons why “growth will be modest relative to historical averages for years to come.”
“The IMF news is sobering but not surprising. There seem to be real head winds to growth in the global economy, certainly more than expected earlier in the year,” Scott Graham, head of government bond trading at Bank of Montreal’s BMO Capital Markets unit in Chicago, told the San Francisco Chronicle.
According to the report, unemployment is likely to average 9 percent next year. This forecast echoes a recent statement released by the Obama administration.
The IMF praised President Obama’s proposal to cut taxes and spend more on infrastructure to provide a short-term stimulus. However, these efforts need to be paired with a longer-term plan to reduce the deficit, the report said.
Budget cuts “cannot be too fast or it will kill growth,” Mr. Blanchard said. “It cannot be too slow or it will kill credibility.”
Mr. Obama on Monday proposed more than $3 trillion in tax increases and spending cuts over 10 years. His proposal will be considered by a congressional panel charged with finding $1.5 trillion in deficit reductions.
The president’s jobs and tax proposals face stiff opposition from congressional Republicans.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
By Michael P. Orsi
Edward Snowden should declare his patriotism in court
- Citing 'unfair system,' Obama commutes sentences for 8 crack offenders
- Gov't wasted $30 billion on 'pillownauts,' crystal goblets -- buying human urine!
- Homeland Security helps smuggle illegal immigrant children into the U.S.
- Bill Gates: The Secret Santa disguised as a 'friendly fellow' on Reddit
- Obamacare 'pajamas boy' gets roundly mocked
- BOLTON: Nero in the White House
- Armed response, not restrictive gun laws, brought swift end to school shooting
- Duck Dynasty Phil Robertson suspended indefinitely for gay quip
- OBAMASCARE: Huge premium hikes rock employer-insured workers
- UHLER and FERRARA: Obamacare, the end of the progressive era
Independent voices from the The Washington Times Communities
Southern Fried Politics from the Lens of a Persian-American Millennial
All of the world’s problems, solved on your back porch
Top 10 handguns in the U.S.
Extraordinary day at Redskins Park
White House pets gone wild!
Let it snow