Front Matter Page
IMF Country Report No. 14/221
UNITED STATES
2014 ARTICLE IV CONSULTATION—STAFF REPORT; PRESS RELEASE
July 2014
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2014 Article IV consultation with United States, the following documents have been released and are included in this package:
Staff Report prepared by a staff team of the IMF, following discussions that ended on June 12, 2014, with the officials of United States on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on July 7, 2014.
Informational Annex of July 7, 2014 prepared by the IMF.
Staff Statement of July 22, 2014.
Press Release summarizing the views of the Executive Board as expressed during its July 22, 2014 discussion of the staff report that concluded the Article IV consultation.
The document listed below has been or will be separately released.
Selected Issues Paper
The publication policy for staff reports and other documents allows for the deletion of market-sensitive information.
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©2014 International Monetary Fund
Front Matter Page
UNITED STATES
STAFF REPORT FOR THE 2014 ARTICLE IV CONSULTATION
July 7, 2014
Focus. The 2014 Article IV Consultation focused on five broad themes to strengthen the recovery and improve the long-term outlook: raising productivity growth and labor force participation, confronting poverty, keeping public debt on a sustained downward path, smoothly managing the exit from zero policy rates, and securing a safer financial system.
Main policy issues.
Policies are needed to boost longer-term potential output through investments in infrastructure, raising educational outcomes, improving the tax structure, and developing and expanding a skilled labor force (including through immigration reform, job training, and providing childcare assistance for working families).
Forging agreement on a credible, medium-term consolidation plan should be a high priority and include steps to lower the growth of health care costs, reform social security, and increase revenues. In the absence of such a comprehensive agreement, efforts should still focus on identifying more modest opportunities to relax the near-term budget envelope, paid for with future fiscal savings.
An enduring consequence of the past recession has been a jump in the number of families living in poverty. Improved employment prospects and economic growth will be essential to reverse this upward movement. An expansion of the Earned Income Tax Credit and an increase in the minimum wage should also be part of the solution.
The goal for monetary policy is to manage the exit from zero interest rates in a manner that allows the economy to converge to full employment with stable prices while avoiding financial instability and negative spillovers to the global economy. This is a complex undertaking. To facilitate it, steps could be taken to expand the Fed’s communications toolkit so as to provide greater clarity on how the Federal Open Market Committee assesses progress toward its longer-run goals.
Continued regulatory oversight is needed to counter the emergence of financial imbalances, particularly those that may be growing outside of the banking system. Policies should also be deployed to keep mortgage credit accessible and attract more private capital into housing finance while minimizing risks to taxpayers.
The U.S. external position is assessed to be broadly consistent with medium-term fundamentals and desirable policies.
Approved By
Alejandro Werner and Tamim Bayoumi
Discussions took place in New York (April 30–May 2) and Washington, D.C. (May 5–23). Concluding meetings with Chair Yellen and Secretary Lew took place on June 12, 2014. The team comprised N. Chalk (head), R. Cardarelli, R. Balakrishnan, F. Columba, D. Igan, L. Lusinyan, J. Solé, J. Turunen (all WHD), D. Jones (MCM), and N. Westelius (SPR). S. Gray, J. Kiff, D. King (all MCM), S. Dawe, E. Mathias (all LEG), and M. Ruta (SPR) participated in some of the meetings.
Contents
AN INTERMISSION IN THE RECOVERY
BETTER TIMES AHEAD
CONFRONTING POVERTY
COUNTERING THE DECLINE IN POTENTIAL GROWTH
PUTTING PUBLIC DEBT ON A DOWNWARD PATH
THE PATH TO LIFT-OFF
SECURING A SAFER FINANCIAL SYSTEM
STAFF APPRAISAL
BOXES
1. How Reversible is the Decline in U.S. Labor Force Participation?
2. External Sector Assessment
3. The Earned Income Tax Credit and the Minimum Wage—A Package
4. Productivity Growth and Its Determinants: Evidence from the U.S. States
5. The Impact of Fed’s Forward Guidance
6. The Foreign Bank Organizations (FBO) Rule
FIGURES
1. Recent Indicators Suggest a Pick-up in Growth
2. Policy Priorities for Boosting Potential Growth
3. Credit Market Risks
TABLES
1. Selected Economic Indicators
2. Balance of Payments
3. Federal and General Government Finances
4a. General Government Statement of Operations
4b. General Government Financial Assets and Liabilities
ANNEXES
I. Risk Assessment Matrix: Potential Deviations from Baseline
II. Public Debt Sustainability Analysis (DSA)
III. U.S. Responses to Past Policy Advice
IV. External Stability Assessment
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UNITED STATES
STAFF REPORT FOR THE 2014 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
July 7, 2014
Prepared By
The Western Hemisphere Department
Contents
FUND RELATIONS
STATISTICAL ISSUES
Front Matter Page
Press Release No. 14/359
FOR IMMEDIATE RELEASE
July 23, 2014
International Monetary Fund
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Washington, D.C. 20431 USA
