IMF Says Sequester Hurting U.S. Economy, Delaying Recovery

Source:  Shahien Nasiripour / The Huffington Post

As much as half of U.S. economic growth this year has been slashed due to tax increases and indiscriminate federal spending cuts known as sequestration, according to a sobering new forecast by the International Monetary Fund, which urged lawmakers to repeal the cuts.

Risks to U.S. growth are “modestly tilted to the downside,” the IMF said in its annual report on the nation’s economy, as a reduction of $85 billion in government expenditures this year due to sequestration has dampened demand and investment, just as tax hikes have taken a big bite out of U.S. paychecks and reduced household spending.

The IMF estimates growth of just 1.9 percent this year, as Managing Director Christine Lagarde said “very significant” decreases in federal spending and higher taxes may have reduced growth by up to 1.75 percentage points.

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