IMF says U.S. growth is set to accelerate, but warns tariffs and debt add risk

The IMF assessment of the U.S. economy struck a balance between near-term optimism and longer-term caution, with the 191-country lender calling the U.S. “buoyant” while highlighting risks tied to trade policy and federal borrowing.

In its outlook delivered on Wednesday, the fund said the U.S. economy was set to accelerate this year and to add to improvements in jobs and price pressures. The IMF’s view was mostly positive, according to the assessment, but it repeatedly pointed to downside factors that could interfere with the path of growth.

On the output front, the IMF said U.S. gross domestic product—the measure of goods and services produced by the country—was growing 2.4% in fourth-quarter 2026 from the last three months of 2025, up from 2.2% growth the year before. The IMF linked the resilience to “strong productivity growth,” positioning productivity as a key underpinning of its forecast.

For labor-market conditions, the IMF projected unemployment would decline from 4.5% in late 2025 to 4.1% in 2026. The fund also said it expected inflation to fall to the Federal Reserve’s 2% target by 2027, pointing to a cooling trajectory for prices that would matter for interest-rate policy.

IMF managing director Kristalina Georgieva addressed the Fed directly, noting that the central bank had cut its benchmark interest rate three times in 2025. Georgieva said the Fed could afford to push the rate down to around 3.4% from 3.6% currently, but she said it should hold off on deeper cuts unless the job market worsens “materially.”

At the same time, Georgieva said the U.S. economy would have performed even better absent “big taxes on foreign imports” under President Donald Trump. The IMF’s report warned that the president’s protectionist trade policies could represent a larger-than-expected drag on activity, tying a potential weakening in growth to the direction of trade restrictions.

The IMF also expressed concern about the federal government’s debts, saying they were rising steadily and would move from just under 100% of U.S. GDP last year to almost 110% by 2031. In the IMF’s framing, that debt trajectory represented a “growing stability risk,” even as the agency projected the economy to continue improving on jobs and inflation.

While the IMF’s outlook left room for continued progress in 2026, the emphasis on tariffs and public-debt dynamics underscored the fund’s view that risks could build even if conditions look favorable at the start of the year.