Durrant Pate/Contributor
The International Monetary Fund (IMF) says it is seeing signs of strain in the American economy; an ‘orange flag’ signalling a grim outlook after a series of dismal job reports and uncertainty on tariff revenue.
IMF spokesperson Julie Kozack, speaking during a regular briefing on Friday (September 12), reported, “What we’ve seen over the past few years is that the US economy has proven to be quite resilient. We do see now that some strains are beginning to show… Domestic demand has been moderating in the US, and job growth is slowing.”
Kozack said the US is on track to lower inflation rates to two per cent, acknowledging that fluctuating trade rates could impact the projected number. Over the summer, Pierre-Olivier Gourinchas, economic counsellor and director of research at the IMF, described trade conditions as “precarious,” highlighting the potential for negative supply disruptions.
“Without comprehensive agreements, the ongoing trade uncertainty could increasingly weigh on investment and activity,” Gourinchas said during the World Economic Outlook update in July.
The Trump administration is currently awaiting approval for foreign tax rates after a federal judge determined tariffs set under the International Emergency Economic Powers Act were unlawful.
As Trump awaits an answer on foreign policy constraints, his administration has raised concerns about inaccurate data from the Bureau of Labor Statistics (BLS), which has suggested a weakening economic outlook for the US. The US economy added 911,000 fewer jobs over the 12 months ending in March than the BLS initially reported, according to newly released data.
In response to the discrepancy, the Labor Department’s internal watchdog says it is initiating a review of how the BLS compiles economic data. Kozack emphasised that mistakes should be mitigated to improve the US’ financial standing in the world.
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