The United States will celebrate the longest economic expansion in history next month. July marks the 10-year anniversary of the turnaround begun in June 2009 to repair the country’s economy following the financial crisis of 2008 and 2009.
To draw a line under the occasion, the International Monetary Fund (IMF) on Thursday released the concluding statement of its recently completed review of the U.S. economy called, cryptically enough, the 2019 Article IV Mission. In technocratically plain English, the statement summarizes the preliminary findings of IMF staff at the end of an official visit (i.e., mission) as part of regular consultations undertaken under Article IV of the IMF’s Articles of Agreement.
In opening remarks at the press conference where the statement was released, IMF Managing Director Christine Lagarde noted that the IMF is “seeing a lot of positives in the macroeconomic outcomes” in the United States. That’s the good news.
The less-good news is that the IMF is “concerned that the benefits from this decade-long expansion have, in general, not been shared as widely as they could have been.” Lagarde points to a “challenging picture,” including a downward trend in U.S. average life expectancy, wider income and wealth polarization, and “suboptimal” education and health outcomes.
The IMF, Lagarde says, believes “that more attention is warranted to promoting inclusive growth to social outcomes more into line with the good macroeconomic developments.”
But Lagarde and the IMF remain most worried about U.S. public debt:
[T]he U.S. public debt is on an unsustainable path. Policy adjustments are needed to lower the fiscal deficit and to put public debt on a gradual downward path over the medium term. There are a range of possible policy options. However, in our view, any successful package will likely require steps to address the expected increases in entitlement spending on health and social security, to raise indirect taxes, and to institute a federal carbon tax.
Like everyone else these days, Lagarde also talked about trade:
It is especially important that the trade tensions between the U.S. and its trading partners including China and Mexico—which, as I have said before, represent a threat to the global outlook and create important negative spillovers to other countries—are quickly resolved through a comprehensive agreement that results in a stronger and more integrated international trading system.
In a direct slap at President Trump’s conviction that “trade wars are good and easy to win,” Lagarde concluded her remarks: “As we mentioned before, nobody wins a trade war.”
The Article IV Mission’s concluding statement is available at the IMF website. Thursday’s press conference follows by a day a statement from Lagarde released in conjunction this weekend’s meeting of G-20 finance ministers and central bankers in Fukuoka, Japan.