The International Monetary Fund (IMF) decreased forecasts for economic growth rates in the U.S. for 2017 and 2018 due to “uncertainty” brought by the Trump administration’s economic policies.
The IMF issued its World Economic Outlook update on Sunday saying that economic growth for the U.S. was lowered to just above 2% this year — a paltry 2.1% — down from 2.3% from earlier in 2017. In April, the IMF had initially forecasted the U.S. at 2.5%.
The international organization, which seeks to promote cross-border monetary cooperation, trade and economic stability, appeared to lay the blame squarely at the Trump administration’s feet:
The major factor behind the growth revision, especially for 2018, is the assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of U.S. fiscal policy changes.
The news comes despite claims from President Donald Trump that his administration would bring 4% economic growth — an estimate he further lowered to 3% since being sworn in. Only six of the last 11 presidents have seen U.S. economic growth beyond 3% during their tenure.
The IMF found that the Trump administration’s proposed spending cuts would more greatly affect lower and middle class Americans, noting that the administrations budget would run “counter to the budget’s goals of promoting safety and prosperity for all Americans.”
Unpredictability on the part of the Trump administration and the GOP’s legislative logjam appeared to play a large role in the assessment:
“Despite a decline in election-related risks, policy uncertainty remains at a high level and could well rise further, reflecting—for example—difficult-to-predict U.S. regulatory and fiscal policies, negotiations of post-Brexit arrangements, or geopolitical risks. This could harm confidence, deter private investment, and weaken growth,” the IMF said.
The IMF also noted that “the U.S. Dollar has depreciated by around 3½ percent in real effective terms since March,” while the Euro was strengthened. Countries such as Germany, France, Italy and Spain all saw their growth projections increase. China’s growth was expected to stay at 6.7%.