The annual review cut its growth forecast to 2%, citing a harsh winter and problems in housing market.
By Dominic Rushe
The International Monetary Fund slashed its forecast for US economic growth on Monday, citing a harsh winter, problems in the housing market and weak international demand for the country's products.
In its annual review of the US economy, the IMF cut its growth forecast by 0.8 percentage points to 2%. At a press conference IMF managing director Christine Lagarde blamed the bad winter for much of the cut and said the setback should be temporary. But she warned: “Growth in and of itself will not be enough.”
As part of a series of reforms the IMF has called for an increase in the minimum wages in the US, currently the lowest when compared to the average wage in any of the Organisation for Economic Cooperation and Development (OECD)’s 34 countries.
She said the number of long-term unemployed, 3.4 million in May according to the Department of Labor, remained too high and the percentage of people in or actively looking for work, the so-called participation rate, remained too low.
“We believe that a rise in the minimum wage would be helpful,” she said, especially if complemented with tax policies to help low-wage earners.
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