27 Jul 2013

US economy improving - IMF

8:35 am on 27 July 2013

The underlying condition of the US economy is improving, according to the International Monetary Fund.

However, the IMF added that the recovery from recession has so far been "tepid" and the United States still faces "powerful headwinds".

But the BBC reports it noted gains on stock markets and in house prices, and predicted that economic growth should gradually accelerate over the next year.

The IMF said the expiration of the payroll tax cut earlier this year and the impact of government spending cuts were "weighing significantly on growth this year".

However, the IMF sees a slightly brighter picture and expects "economic activity to accelerate to 2.7% next year as the fiscal drag subsides and the negative legacies of the financial crisis wane further".

On unemployment, the IMF predicted that the rate would remain broadly stable this year. It also expects the rate of unemployment to gradually fall in 2014.

The BBC reports the Federal Reserve's policy of keeping interest rates at close to zero was also seen by the IMF as still being necessary to support the recovery.