WASHINGTON (Reuters) - U.S. economic growth will be much weaker this year and in 2011 than previously thought and that dims hopes for bringing down a very high unemployment rate anytime soon, the International Monetary Fund said on Wednesday.

A man looks over employment opportunities at a jobs center in San Francisco, California, in this February 4, 2010 file photo. REUTERS/Robert Galbraith/Files

In a sober assessment of the U.S. outlook, the IMF pulled down its estimate for 2010 growth to 2.6 percent from the 3.3 percent it published in July and said gross domestic product or GDP will expand 2.3 percent in 2011 instead of 2.9 percent.

“The most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession,” the IMF said in its World Economic Outlook published ahead of weekend semi-annual meetings of it and the World Bank.

The IMF said the main reason the U.S. recovery is so weak is that consumer spending is sluggish and suggests it is little wonder that is the case. Falling home prices have reduced household wealth, 9.6 percent of the workforce is unemployed, banks won’t lend and people are scared into saving.

It says the gap between actual and potential economic output will be a lingering drag on the pace of recovery.

“The unemployment rate is therefore expected to remain stubbornly high,” it warns, which further hinders consumption spending that is the largest component of U.S. GDP.

“Risks to the outlook remain elevated and are tilted to the downside,” the IMF said, noting that real estate markets are “still fragile” and soaring government debt has created worry in financial markets.

It says the government must lay the groundwork in 2011 for fiscal consolidation to reduce its indebtedness. The IMF said the Obama administration had set the right direction in its mid-session economic review by proposing fiscal tightening of about 1 percent of GDP.

The IMF said there was “a tail risk of deflation” arising from soft consumer prices, weak labor markets and consumers’ increased wish to save instead of spend.

Nonetheless, it urged that the Federal Reserve maintain its policy of very low interest rates to try to spur subpar growth and to offset lingering financial strains.

The U.S. central bank has held overnight interest rates at nearly zero for close to two years and Fed Chairman Ben Bernanke hinted this week that it could resume asset purchases to inject more liquidity into the economy in hope of priming more lending by banks to speed up recovery.

In contrast with the United States, neighboring Canada’s economy remains “relatively buoyant” with both household balance sheets and banks in good shape, the IMF said.

The main concerns for Canada are external ones, arising from the possibility of lower commodity prices, mainly for oil and minerals, and the risk that the United States, its key export market, could slow down more than anticipated, the IMF said.