Jan 16, 2017

IMF: Trump stimulus will boost growth

Trump's economic policies are up in the air, but the IMF likes what it's hearing. Its new economic forecast predicts the U.S. economy will grow by 2.3% this year and 2.5% in 2018, well above the 2016 pace of 1.6%.

The IMF's sunnier forecasts rests on the idea that the Trump Administration will usher in an era of higher deficit spending and growth-friendly tax reform.

Don't get too excited: The IMF said its updated forecast is "particularly uncertain," given the unpredictable politics of Washington in 2017. It cautioned that any deficit spending should be aimed at productivity boosting infrastructure spending or shoring up social safety nets. And the Trump Administration risks higher inflation, unproductive increases in debt, and a strong reaction from the Federal Reserve if its stimulus is too large or overly generous toward the rich.

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