The International Monetary Fund said on Wednesday the U.S. economy was “overall in good shape”, with growth set to accelerate from recent setbacks despite an overvalued dollar, but the Fund warned that too many Americans were living in poverty.
The IMF expects U.S. growth to be 2.2 percent in 2016 and 2.5 percent in 2017, with inflation rising slowly toward the Federal Reserve’s goal of two percent, it said in a statement at the conclusion of its annual review of U.S. economic policies.
“At today’s level of the real effective exchange rate, the current account deficit is expected to rise above 4 percent of GDP by 2020, pointing to the U.S. dollar being overvalued by 10-20 percent,” the IMF said in its report.
The IMF said among the biggest risks to future U.S. growth were another downdraft in global demand, declining participation in the labor force as the population ages, and too many Americans living in poverty, about one in seven people and one of every three households headed by a female.
It urged U.S. policymakers to take steps to increase labor force participation, including improving child-care and other family-friendly benefits to draw more women into the workforce, pursuing immigration reforms and reworking the disabiltiiy insurance program to allow for part-time work.
It also called for the United States to raise the federal minimum wage while at the same time providing a more generous earned-income tax credit, and improving early childhood education.