U.S. Economy Faces 'Possibilities' Of A Hard Landing According To IMF

According to the IMF, the United States is still in the midst of a downturn economically and despite encouraging data being reported to the contrary, a downturn remains "within the realm of possibility."

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Gita Gopinath, the first managing director of the IMF, stated that the IMF had been surprised by the strength of the U.S. labor market and consumer spending, which led to it revising its economic growth forecast for the sector.

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In light of the latest U.S. inflation data, which showed signs of cooling in the past few weeks, she made these comments.

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According to Gopinath, "Looking at the very recent data, there are some signs that the economy might be softer than expected."

According to her, "That could mean that we could avoid a recession in the near future".

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The International Monetary Fund (IMF) reported on Tuesday that it expects the U.S. economy to grow by 1.6% this year, compared to the 1% growth forecast for 2022 in the most recent World Economic Outlook report.

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Although Gopinath has made it clear that the economy remains in a delicate position, he has warned that there is no room for error in the economy.

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We're looking at very low growth numbers for the U.S. if we look at our growth numbers, and so the risk of a hard landing in the United States remains," she added.

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Gopinath said that there is a possibility that such a shift from a high level of growth to a low or even negative level of growth might be caused by Federal Reserve rate hikes in the near future.

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She said that an event of this type is not outside of the realm of possibilities and that such a thing is possible.

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She did, however, add that so far, central banks have been able to strike a good balance between stimulus and deflation.

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In her opinion, the Fed has been right to keep an eye on inflation, while adjusting as necessary based on the data it receives. “I think at the moment the Fed has been correct in adjusting as necessary, based on how the data are coming in,” she added.

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