IMF downgrades US economic forecast
If fear from the Fed that the economy was crumbling wasn’t enough to raise a scare on Wall Street last week, now the IMF is also saying that the outlook on America isn’t what it should be.
International Monetary Fund Chief Christine Largade said on Sunday that the United States needs a “credible” plan to keep the economy in check. Lagarde’s comment, delivered at a conference in Jackson Hole, Wyoming, came only two days after Federal Reserve Chairman Ben Bernanke revealed that the road to economic recovery was “much less robust” than the Federal Reserve has hoped for.
Speaking in Wyoming, Lagarde said that lawmakers need to push for economic growth, but a failure to act accordingly to debt dilemmas in the future would cause the country to lose credibility. "Who will believe that commitments to cut spending can survive a lengthy stagnation with prolonged unemployment and social dissatisfaction?” asked Lagarde.
The unemployment rate in the United States has been at or above 9.0 percent since April of this year.
On Friday, the Fed’s Bernanke said that "The economic healing will take a while, and there may be setbacks along the way." His announcement came at the same time that it was revealed that while the United States did see economic growth during the first quarter of 2011, expansion was only at a rate of 1.0 percent.
The IMF, meanwhile, doesn’t think that that “robust” recovery is exactly on the way. They predicted on Monday that the US will grow by only 2.0 percent in all of 2012, a drastic difference to their earlier prediction of 2.7 percent growth. Abroad, the IMF expects growth in the eurozone to be only around 1.4 percent next year.
While Bernanke and Wall street search for solutions, Pennsylvania Avenue has offered one up of their own. President Barack Obama offered up his nomination of Alan Krueger as his new top economic advbiser on Monday, offering Americans hope that a new face in the country’s monetary fairs could offer a breath of fresh air in the doom and gloom that has plagued the US as of late.
Upon offering his nomination today, Obama issued a statement saying, "As one of this country's leading economists, Alan has been a key voice on a vast array of economic issues for more than two decades.”
"Alan understands the difficult challenges our country faces, and I have confidence that he will help us meet those challenges as one of the leaders on my economic team,” added the president.
Former Obama economics advisor Doug Campbell agrees. Speaking to RT this week, Campbell said that his White House sources say that Krueger has a "great relationship" with President Obama, and Campbell himself feels that the new advisor has "the strongest liberal credentials" out of any of his peers.
While Obama may have confidence in Krueger, the IMF isn’t as optimistic. "The downside risks to the global economy are increasing," Lagarde said from Jackson Hole. "Those risks have been aggravated further by a deterioration in confidence and a growing sense that policymakers do not have the conviction, or simply are not willing, to take the decisions that are needed."