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Wednesday, June 22, 2016

IMF says US poverty is now urgent problem, 1 in 7 live in poverty in US, 'creates social strains, polarization'. 1Q 2016 growth slowed to .5, growth forecast cut to 2.2 from 2.4-BBC

6/22/16, "IMF warns the US over high poverty," BBC

"The US has been warned about its high poverty rate in the International Monetary Fund's annual assessment of the economy.

The fund said about one in seven people were living in poverty and that it needed to be tackled urgently

It recommended raising the minimum wage and offering paid maternity leave to women to encourage them to work.
The report also cut the country's growth forecast for 2016 to 2.2% from a previous prediction of 2.4%.

Slower global growth and weaker consumer spending were blamed. US economic growth slowed to an annual pace of 0.5% during the first three months of the year, down sharply from 1.4% in the last three months of 2015.
But the stronger labour market meant that overall "the US economy is in good shape", said the IMF's managing director Christine Lagarde. May's unemployment figures showed the rate at an eight-year low of 4.7%.

However Ms Lagarde warned that "not only does poverty create significant social strains, it also eats into labour force participation, and undermines the ability to invest in education and improve health outcomes".

"Our assessment is that, if left unchecked, these four forces - participation, productivity, polarisation and poverty - will corrode the underpinnings of growth and hold back gains in US living standards," she added.

The report called on the US to invest more in education, as well as implement better social programmes such as childcare to help poorer Americans get jobs. 

The IMF has repeatedly said that Brexit would not be a good economic move for the UK.

Asked about its impact on the US, Ms Lagarde said it would largely be seen through financial channels - such as an increase in the value of the dollar if investors used the currency as a haven, as well as volatile markets - but that "it would most likely not entail a recession in the United States"."


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