The International Monetary Fund said the U.S. economy is poised to grow faster this year even as it flagged risks tied to trade restrictions and federal finances. In its assessment released Wednesday, the IMF described the U.S. economy as “buoyant” and forecast improvement in labor-market conditions, along with a glide path for inflation toward the Federal Reserve’s 2% goal.
The IMF also projected that U.S. growth would accelerate in 2026, citing an expansion in 2025’s fourth quarter of 2.4% compared with the prior three months. It contrasted that with 2.2% growth in the same period a year earlier, and said the change sets up an easier year for hiring and employment.
On jobs and inflation, the IMF predicted unemployment would decline from 4.5% in late 2025 to 4.1% in 2026. It also projected inflation would fall to the Fed’s target by 2027, pointing to a cooling trend that would, under the IMF’s view, support a more normal interest-rate setting.
IMF managing director Kristalina Georgieva said the Federal Reserve, which had cut its benchmark interest rate three times in 2025, could afford to push rates down further. Georgieva put the possible level at around 3.4%, compared with 3.6% at the time of the IMF’s remarks, and added that the Fed should wait on deeper cuts unless there is a “material worsening” in the job market.
In assessing why the U.S. economy has held up, the IMF said the country has benefited from strong productivity growth. Even so, Georgieva tied part of the outlook to policy choices, saying the U.S. would have performed even better without President Donald Trump’s large taxes on foreign imports.
The IMF warned that the protectionist trade policies could weaken growth more than expected. It said the president’s approach “could represent a larger-than-expected drag on activity,” framing tariffs and related trade restrictions as a source of downside risk even while its baseline for 2026 remains relatively upbeat.
Separately from trade, the IMF focused on the federal budget’s debt trajectory. It said it sees the federal government’s debts rising steadily from just under 100% of U.S. GDP last year to almost 110% by 2031, and described the rising debt as a “growing stability risk.”
The IMF’s outlook lands as markets and policymakers weigh how much additional rate adjustment the Fed can pursue and how trade policy could affect growth and inflation. The agency’s bottom line was a mix of “buoyant” near-term momentum with cautions that tariffs and debt could test the resilience of the U.S. economy.