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September 20, 2011 at 11:12 AM
The International Monetary Fund lowered its outlook for the U.S. in a report released Tuesday and said that the world economy has entered a “dangerous new phase” as the recovery had weakened. Projections for both the U.S. and Europe were gloomy, with even the lower numbers requiring improvement from the current rate of growth to be met.
The report said that both sluggish growth and a protracted job recovery were making the U.S. economy struggle. Poor consumer and business sentiment combined with a weak housing market and problems in household finances added up to substantial downside risk.
The report advocated both debt reduction and stimulus spending simultaneously, and warned that if the former did not occur through “bold political commitment” a “sudden collapse of market confidence … could seriously disrupt global stability.” The latter would, it added, “partly cushion private activity” during a “sluggish transition from public to private demand.”
