The IMF Warns the US Over Excessive Spending
In its annual World Economic Outlook, the IMF said, “The extraordinary recent performance of the United States is certainly impressive and a major driver of global growth.” There are also strong demand factors, as well as fiscal stances that are out of line with long-term fiscal sustainability.
Washington's overspending risks reviving inflation and undermining long-term fiscal and financial stability worldwide by ratcheting up global funding costs.
The IMF warned that "something will have to give."
COVID-related stimulus, aggressive investments in infrastructure and clean energy, and rising interest rates have driven US deficit spending in recent years. Congressional Budget Office estimates that the public debt will reach $45.7 trillion, or 114% of GDP, by 2033, up from 97% at the end of 2023.
She has repeatedly stated that debt sustainability should be measured by the cost of servicing debt as a percentage of GDP, adjusted for inflation, according to Treasury Secretary Janet Yellen. According to White House projections, real net interest expenses will remain below 2% of GDP.
If interest rates remain high, Yellen concedes, her forecast is vulnerable. The video below shares the global effects of the US dollar and the IMF's assessment.
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