Market Commentary

Like a host at a dinner party, the International Monetary Fund (IMF) put the performance of the U.S. economy on the table last week to be gnawed over by world markets. When the IMF presented its annual review of the world’s largest economy, it stated that:

“Despite some improvements in economic indicators, particularly in the housing market, the very rapid pace of deficit reduction… is slowing growth significantly… U.S. growth is expected to slow to 1.9 percent in 2013, from 2.2 percent in 2012. This projection reflects the impact of the sequester ($85 billion of automatic U.S. government spending cuts), and the expiration of the payroll tax cut and the increase in tax rates for high-income taxpayers…Growth could pick up to 2.7 percent next year with a more moderate fiscal adjustment and a further strengthening of the housing market.”

The IMF also said the Federal Reserve should continue quantitative easing through 2013.