The Blubber

US economy to slow in 2025, per the IMF.

The U.S. economy is set to remain a primary driver of global growth through the rest of this year and into 2025, fueled by resilient consumer spending that has weathered both high inflation and elevated interest rates, the International Monetary Fund (IMF) reported Tuesday.

In its latest World Economic Outlook, the IMF raised growth forecasts for the U.S. for both 2024 and 2025, making it the only advanced economy to see an improved outlook for both years. The IMF's chief economist noted that the Federal Reserve's efforts to achieve a "soft landing"—where inflation eases without significantly harming the labor market—have been largely successful.

On the emerging market front, countries like India and Brazil received positive adjustments in the IMF’s forecast, while growth projections for China were reduced for this year and held steady at a lower-than-average 4.5% for 2025.

However, the IMF warned of ongoing risks from global conflicts, potential trade tensions, and the lasting effects of restrictive monetary policies used by the Fed and other central banks to control inflation.

White House National Economic Council Director Lael Brainard highlighted the U.S.’s leading growth performance among advanced economies for a second consecutive year.

Despite these shifts, the IMF’s World Economic Outlook kept its global GDP growth forecast for 2024 steady at 3.2%, indicating moderate growth as international finance leaders gather for the IMF and World Bank meetings in Washington. Global growth is projected at 3.2% for 2025—slightly lower than July’s forecast—while medium-term growth is expected to decline to a “mediocre” 3.1% within five years, well below pre-pandemic levels.

IMF chief economist Pierre-Olivier Gourinchas expressed optimism about the U.S.’s economic resilience, saying, “The news on the U.S. is very good in a sense. The labor market remains robust, even if it has cooled slightly.”