Fund says economic benefits of decade-long expansion have not been widely shared

This article is more than 1 year old

This article is more than 1 year old

The increasingly polarised US economy has meant that a record-breaking period of growth has been accompanied by falling life expectancy, high levels of poverty and stagnant living standards for average Americans, the International Monetary Fund has said.

In its annual health check on the world’s biggest economy, the IMF highlighted a range of “troubling” social indicators marring a decade-long expansion which in July will be the longest in the country’s history.

It called for more generous in-work benefits for the low paid, a minimum wage rise, higher spending on education and action to reduce deaths by opioids as part of a wide-ranging programme of anti-poverty measures.

The IMF’s annual article IV consultation said the US economy had shown extraordinary resilience, noting that unemployment was at its lowest in 50 years, but that “the benefits from this decade-long expansion have not been widely shared”.

It singled out:

The impact of rising suicides and drug overdoses on falling life expectancy, now one of the lowest in the G7.

A rise of just 2.2% in inflation-adjusted incomes for the median US household since the end of the 1990s, even though per capita incomes have risen by 23%.

A decrease in wealth among the poorest 40% of the population since 1983.

The fact that 45 million Americans live in poverty.

An erosion of social mobility so that half of today’s young American adults earn less than their parents did at a similar age. Forty years ago the figure was 10%.

Poor education outcomes by international standards despite devoting a bigger slice of national income to schools and colleges.

“Addressing the growing divergences between the aggregate fortunes of the real economy and the standard of living for the bulk of the US population is complex and will require action on many fronts,” the IMF said.

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The article IV report predicted that the US growth rate would slow from 2.6% this year to 2% in 2020 as the impact of Donald Trump’s tax cuts faded.

Trump intends to put the economy at the heart of his re-election campaign next year, but the IMF expressed concern about the impact of protectionism and the possibility of a financial crash.

“A deepening of ongoing trade disputes or an abrupt reversal of the recent ebullient financial market conditions represent material risks to the US economy”, it concluded.