IMF: U.S. Q2 GDP to contract by 37 pct

Added On July 19, 2020

The International Monetary Fund (IMF) estimates that the U.S. economy will contract by an annualized rate of 37 percent in the second quarter and by 6.6 percent for the whole year. In its annual Article IV review of the U.S. economy, the IMF said that the longest economic expansion in U.S. history has been derailed by the unanticipated advent of COVID-19, with the poorest households facing "particularly precarious prospects". It said the nature of the pandemic has created particularly large strains for labor intensive, face-to-face services, and the unemployment rate among lower income households is expected to remain high. Meanwhile, the IMF noted that the significant increase in debt levels gives rise to important vulnerabilities. General government debt is expected to rise to 160 percent of GDP by 2030 even without further rounds of fiscal stimulus, and job losses and income declines will lead to increased household indebtedness. There are already urgent warning signs that the depth of the economic contraction and the sectoral distribution of economic losses will lead to a "systemic increase in poverty," adding to macro risks.