IMF Slashes US Growth Expectations; Pushes Higher Minimum Wage, Removing Tax Loopholes & Fiscal Stimulus

Tyler Durden's picture

Who could have seen that coming? The IMF has slashed US growth expectations for 2014 from 2.8% to 2.0% (with 2015 hockey-sticking back to 3.0%). The IMF also warned the Fed should be "mindful of financial stability," but that is not the most surprising aspect of the IMF's mea culpa as they plunge head first into policy decisions...

  • *IMF RECOMMENDS RAISING U.S. MINIMUM WAGE
  • *IMF RECOMMENDS ADDITIONAL U.S. INVESTMENT IN INFRASTRUCTURE
  • *IMF RECOMMENDS LIMITING OR ENDING ITEMIZED TAX DEDUCTIONS

And then there's this...

  • *LAGARDE SAYS IMF'S CUT IN U.S. OUTLOOK TIED TO 1Q WEATHER

 

 

As Bloomberg reports,

The International Monetary Fund cut its growth forecast for the U.S. economy this year and said the Federal Reserve may have scope to keep interest rates at zero for longer than investors expect.

 

The Washington-based IMF now sees the world’s largest economy growing 2 percent this year, down from an April estimate of 2.8 percent. The IMF left a 2015 prediction unchanged at 3 percent, and said it doesn’t expect the U.S. to see full employment until the end of 2017, amid low inflation.

 

For the Fed, the forecast means “policy rates could afford to stay at zero for longer than the mid-2015 date currently foreseen by markets,” the fund said in its annual assessment of the U.S. economy.

Then they piled into policy...

They urged the U.S. to raise the minimum wage, invest in infrastructure and overhaul immigration policies to boost  potential growth as it slips below the long-term average.

 

The IMF also urged the implementation of more proactive labor market policies, which included strengthening the Earned Income Tax Credit and increasing the minimum wage to align more closely with U.S. historical levels and international standards.

 

“This would help raise incomes for millions of working poor and would have strong complementarities with the suggested improvements in the EITC,” said the report.

And worries about bubbles and fragility...

The Fed has to contend with “multiple areas of uncertainty,” making the outlook for its policy “particularly uncertain,” according to the IMF. That is “in contrast to the narrow range of market views on the path for future policy rates as well as the current historically low pricing of asset price volatility.”

 

Even if the Fed communicates well its planned increase in interest rates, there’s still a risk for “significant swings in market flows and prices” in coming months, including beyond U.S. borders, the IMF said.

Finally, and perhaps most worrying for the bond bears is the new terminal rate low growth new normal appears to be confirmed...

The IMF also said it foresees longer-run potential growth averaging around 2 percent for the next several years, below historical averages and less than last year’s estimate. A year ago, the IMF projected potential growth rates at 2.3 percent in 2015-2016 and 2.4 percent in 2017-2018.

One wonders, rhetorically of course, if the IMF also pulled a "Polish Central Bank"
and suggested that the US fire all Republicans in return for this
suggestion
; and we wonder how El-Nino is "priced-in" to this forecast.

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TheRideNeverEnds's picture

Meanwhile the e-minis explode higher out of the gate, BTFD bitchez! 

Newsboy's picture

If the minimum wage goes up, do I get a bigger unemployment check?

lordylord's picture

So basically, the IMF recommends that the US takes action to hurt the economy even more.  Wonderful.  I can't wait for the NWO and the coming utopia.  2% growth still seems optimistic, but with the bs numbers, GDP could "beat" the expectations.

Stackers's picture

This from a group of bureaucrats who pay zero % in tax.

Buckaroo Banzai's picture

I suppose they would have also recommended that we buy an infinite amount of STAWKS but apparently that is already being handled at the highest levels...

Vampyroteuthis infernalis's picture

Not only is the IMF a tool of the CBs it appears to have gone full librtard!!

duckandcover's picture

Me thinks you've missed the point.  The banks live to keep the status quo, the elite skim off the top and reinvest and round and round, it's not about ideology.

kchrisc's picture

But they will pay a "head tax" later.

Occident Mortal's picture

That's absolutely nothing compared to what they told the Greeks to do.

 

"Sell your kidneys and send the proceeds to your government, foreign banks are counting on you"

kridkrid's picture

Hurting the economy more is not what drives those recommendations. The recommendations are meant to maintain the status quo for as long as possible. The recommendations drive increasing structural debt AND inflation, which work hand in glove. GDP is a red herring in all of this. It's a meaningless statistic. Our eCONomy is based, in part, on a game of pretend as we trade trinkets amongst ourselves, measured in DOLLARS, and reported as GDP. It's a bit of shell game built on top of the Ponzi scheme of a monetary system where ALL money is debt with interest attached.

To be perfectly clear... I'm not defending the IMF's recommendations, but people need to understand the fundamental flaws (unfixable flaws) that are core to our predicament.

kchrisc's picture

Good analysis.

Let me add that the recommendation for an increase in the minimum wage is really a tax increase. An increased minimum wage will bump up SS and Medicare tax receipts, at least on paper, and enable the DC US to buy maybe one more year.

Haus-Targaryen's picture

lol ... never even thought about this. 

I love how no matter what the government does it is just screwing up the situation more and more and moar.

Headbanger's picture

But that's exactly what a bloated pig of a government like ours does to keep justifying their existence.

They keep fucking things up and creating disasters like global warming so the sheeple want an even moar bloated government to save them!

And of course the same government does all it can to obliterate even the concept of individual responsibility so the sheeple become moar and moar dependent on it.

NotApplicable's picture

It's known as "government creates its own demand."

Just as long as the sheeple bleat out for more.

BlindMonkey's picture

In addition to causing misery, .gov is most expert at can kicking.

War_is_Peace's picture

"I love how no matter what the government does it is just screwing up the situation more and more and moar.

 

If you look at everything they do in the context of causing intentional damage to the many in order to benefit the few, it all begins to make sense.

Uncertain T's picture

Do you think anyone in government would ever recomend that we return to the tried-and-true system where "wages" are negotiated between the employer and employee?   No, that would destroy the central planning from which their power is derived. 

pods's picture

If the IMF wasn't so evil I would call them stupid.

pods

Stoploss's picture

=====================FUCK THE IMF======================

max2205's picture

Fuck the IMF

AND THE EU

 

....................../´¯/) 

....................,/¯../ 

.................../..../ 

............./´¯/'...'/´¯¯`·¸ 

........../'/.../..../......./¨¯\ 

........('(...´...´.... ¯~/'...') 

.........\.................'...../ 

..........''...\.......... _.·´ 

............\..............( 

..............\.............\...

 

 

BlindMonkey's picture

You would wear out that finger raising it to all the .gov and para-governmental agencies that deserve it.

JRobby's picture

Laugh track deafening now, for so many, many reasons. IMF? Really?

Common_Cents22's picture

do the EXACT OPPOSITE of what the IMF prescribes.

nah's picture

The IMF recomends free deserts and playtime for volunteers in the US

youngman's picture

Pretty political....who do they think they are.....

Bioscale's picture

Banksters mafia of the world. Most of politicians of the countries on this planet must obey what they say and claim.

BobTheSlob's picture

Newsflash: the FED CAN'T raise interest rates. Each 1% = 150 billion in new debt. Welcome to the new normal.

valley chick's picture

Well this has got to be bullish! It's all bullish!!  What a joke this all has become!

101 years and counting's picture

Fuck the IMF, and the oompa wanna-be running that criminal syndicate.

jay28elle's picture

F* the IMF.  Mind your own biz...

NotApplicable's picture

They don't have any business to mind.

Thus yours will have to do.

john_connor's picture

It's only "fair".

Frank N. Beans's picture

thank you IMF, oh magnificent and all-seeing one.

now stfu

notadouche's picture

U.S. note to self: "Do the exact opposite of what IMF states.  The IMF equates to the being the Geroge Costanza method of success, doing the exact opposite of what he thinks is right.

overmedicatedundersexed's picture

IMF remind us all if your top execs pay any income tax?? 0% you say,  of course tax loop holes have no meaning to that elite reptile cartel. at ZH i recommend to the FED that no one pays income tax to .gov see how fast our military comes home from those 100's of bases across the world.

zaphod42's picture

I think the IMF is simply reminding us that the workers are also the buyers of goods and services.  If you starve them, eventually that does rise to the top and your economy dies as you no longer have consumers able to purchase anything.  

Unlike trickle down, which never happens, trickle up is guaranteed.  Don't believe it?  Just wait!  American Spring is coming.

Craig

The Most Interesting Frog in the World's picture

They wouldn't starve if prices didn't rise due to inflationary policies implemented by the government and Fed (like minimum wage)...

kridkrid's picture

But that's EXACTLY how our system was designed. Debt issued as money with interest attached. Only the "system" doesn't contain both the principal and the interest. Sooooo.... more debt must be created/loaned into existence at ALL TIMES. It's a scam, but it's our reality. There is no fix.

kridkrid's picture

This is correct... and it's part of maintaining the status quo. It's not a "solution" mind you... it just kicking the can a little further down the road. The road ends at the collapse of the currently economic/monetary system. What that timeframe is or what's next is way beyond me.

Common_Cents22's picture

i am telling the IRS i lost all my tax data.

11b40's picture

Well, the IMF says get rid of itemized deductions, so it won't matter.  They have records of all your reported income.

My advice to anyone who can swing it is to start an LLC and run everything you can through it.  Mine is about to buy me a pick-um-up truck.

jubber's picture

Even the European markets having trouble following this ridiculous US ramp today

Smegley Wanxalot's picture

To get to 2% for 2014 we have to average 3% per quarter for Qs 2 thru 4.  Expect a further revision for 2014 to 1.25%, and a reality of 1.1% when all is said and done and printed.

MFL8240's picture
  • *IMF RECOMMENDS RAISING U.S. MINIMUM WAGE
  • *IMF RECOMMENDS ADDITIONAL U.S. INVESTMENT IN INFRASTRUCTURE
  • *IMF RECOMMENDS LIMITING OR ENDING ITEMIZED TAX DEDUCTIONS

Are you fucking joking?  Who in the hell does this group think they are?

Seasmoke's picture

Bring back the French Rapist. 

vote_libertarian_party's picture

So is that 2% est WITH all of the policy suggestions?

 

So are they saying if we don't do that the economy will be slower?

wmbz's picture

The IMF (international mother-fuckers) says raise he minimum  wage! So do I, raise it to $50.00. That would fix everything!

sarc/

insanelysane's picture

Min wage to $100 and tax rate to 100% will fix everything. /s

GCT's picture

The IMF is just recommending what our commander in chief has been stating for years.  Now with the IMF stating this, the administration will have even more firepower.  If it backfires then they can blame the IMF even though the IMF is nothing but a mouthpiece for the USA government!  WIN WIN for the politicians!  Blame someone else!!

Hell our GDP looks even worse if you use last years metrics.  Oh I forgot we had to revise histroy last year by changing the metrics once again and changing the history of the GDP going all the way back to when they started using it!  Well those in charge get to write and re-write history! 

Chupacabra-322's picture

"If it backfires then they can blame the IMF even though the IMF is nothing but a mouthpiece for the USA government!"

Word on the street is,it's where the Criminal CIA parks & launders their Herorein money.