Priorities

Cooperation and compromise go a long way.

   Despite a harsh winter and a "still-struggling housing market, an inventory correction, and slower external demand," the International Monetary Fund reported today, economic momentum faded in America.
   Even so, the IMF said, "the U.S. recovery is gathering steam, but managing the exit from zero interest rates and boosting potential growth remain top priorities."
    As noted here yesterday, a drop in GDP growth earlier this year could be just a pause before a summer bloom, and confidence can be a major force for improvement. The IMF reported today that the group "expects growth to accelerate in the remainder of the year," probably in the 3 percent to 3.5 percent range, "as employment improves, firms boost production, sales and orders of durable goods pick up, and confidence returns."
   However, "the large drag from the first quarter contraction" (a drop of 2.9 percent in GDP), "will be tough to offset, ... and growth for the year as a whole will be a disappointing 1.7 percent."
    Meanwhile, almost 50 million Americans "still live in poverty," the IMF continued, and this includes almost one-in-four American children." To bring this number down, the IMF report urged an increased minimum wage and an expanded Earned Income Tax Credit to help solve the problem.
   And among other things, the IMF called for a more flexible fiscal plan so the government can help support economic growth, reduce poverty, rein in health care costs, increase tax revenues and reform Social Security.

   A tall order. But one that must be filled if the U.S. is to achieve stable but steady economic growth and prosperity, assisted by government investment. "Without further policy interventions, the IMF expects potential growth to level off at around 2 percent in the coming years," the report said. These policies should include more investment in infrastructure, improved education, a better tax system, building a skilled labor force (including through immigration reform, job training and childcare assistance for working families), the report said. For more, visit the IMF web site, at www.imf.org.

   So it may be easy to list what should be done, but it's a lot harder to estimate what will be done. Clearly, cooperation and agreement on goals, without being hampered by political bickering, will go a long way toward dealing with America's economic issues.