Let There Be Light: U.S. Economy To Grow in 2010

2009-06-16 | 07:40

But the IMF predicts a 2.5% decline for 2009

Patience is more than a virtue, in this economic downturn it's a necessity. The International Monetary Fund predicts the U.S. economy will start growing again...but we'll have to wait until 2010 for the gains to get underway and at an anemic 0.75% at that.

For 2009, the IMF expects the U.S. economy to contract 2.5%. But that's better than the 2.8% decline the IMF forecast just two months ago. Back then, the IMF also predicted the U.S. economy would post zero growth.

Furthermore, the IMF doesn't expect U.S. unemployment to stop rising until the second half of 2010. It also urged the U.S. to pare debt, which may rise to 75% of gross domestic product in 2011, nearly twice what it was in 2008, and higher than the 70% of GDP forecast by the White House.

To cut its losses, IMF said the U.S. must cut spending or boost revenue by an additional 3.5% of GDP through 2019 to keep to debt levels sought by the White House—70% of GDP in 2019. How can the U.S. get to that percentage? By reducing the deductibility of interest on corporate debt and household mortgages, and raising energy taxes—not the kind ofsolutions that supply-siders want to hear!