The clearing of Washington’s fierce debt and deficit battles of the past three years has opened the way toward stronger US economic growth, the International Monetary Fund said Tuesday.
Discounting any lasting impact from the unusually harsh winter in much of the country, the Fund reaffirmed its forecast that the US economy would expand by 2.8 percent in 2014 and pick up to 3.0 percent next year.
“The unusually harsh winter weather weighed on activity in early 2014, but growth is expected to rebound over the rest of the year,” the Fund said in its World Economic Outlook.
“More moderate fiscal consolidation helps,” it added, highlighting the political compromise that prevented Republicans from slashing spending to balance the US budget in a short period.
With the political deals on the budget and debt ceiling achieved in January and February this year, the world’s largest economy, though growing slowly, has the potential to strengthen and continue to anchor a frail global economy.
It also said that the Federal Reserve’s easy-money policies, including its ultra-low interest rate and quantitative easing program, have been important, especially to help the recovery in asset prices and the real estate market, boosting household wealth.