The U.S. economy could be in a better condition today compared to a year ago but remains restrained due to the spending cuts in the government and new payroll tax increases, said the IMF on Friday.
An annual report released by the International Monetary Fund on the economy in the United States has underscored that the basics in the economy are improving.
Housing and construction prices are on the rise, finance in a good number of households has become more stable and businesses across the country are beginning to hire.
The IMF report stated that the outlook is more positive currently than compared to last year’s report.
According to Christine Lagarde, the managing chief of the IMF, there are more indications that the recovery of the economy in the U.S. is little by little making headway as it becomes more and more consistent.
Nevertheless, the forecast from IMF of growth in the U.S. economy is just 1.9% for 2013, the same it had forecasted for April, which was down from last year’s 2.1%.
The forecast falls short of projections made by economists that the U.S. economy would improve in 2013 by more than 2%.
The IMF in its report stressed that the new tax increases and a reduction in overall spending, would cut more than 1.5% of the growth in the economy.
The IMF opposed such high cuts in spending that took effective starting in March. Its report said that the budget deficit reductions had been too rapid and ill designed.
The report says the U.S. Congress needs to scrap the budget reductions of $84 billion and put in their place long term cuts that tend to weigh less on the economy, especially one that is amidst a recovery.