IMF: U.S. economy will grow only 2% this year

WASHINGTON – The International Monetary Fund today cut its forecast for U.S. economic growth in 2007 to 2.2 percent, from its September estimate of 2.9 percent; the new forecast is the lowest in five years and 33 percent less than last year’s 3.3 percent growth, Bloomberg News reported.
The twice-annual World Economic Outlook left the IMF’s forecast for the world economy at 4.9 percent, unchanged from the last forecast, which was made in September.
If the IMF predictions are accurate, this will be the first year since 2003 that the United States will not be the fastest-growing among the Group of Seven, Bloomberg said; instead, the nation will rank fourth – after the United Kingdom, Canada and Japan. U.S. growth in 2007 also may trail that of the 13 euro nations, for which the IMF boosted its growth prediction to 2.3 percent from the previous 2 percent.
But, the report said, “A growth pause still seems more likely at this stage than a [U.S.] recession. The expansion is expected to gradually regain momentum, with quarterly growth rates rising during the course of 2007.” And next year, the IMF predicted, though housing construction will continue to be a drag on the U.S. economy, a strong labor market and high corporate profits will spark a rebound to 2.8-percent growth.