IMF says US economy showing strains; tariffs pose some risks to inflation

Washington: The US economy is showing some strains after years of resilience, with domestic demand moderating and job growth slowing, the International Monetary Fund said on Thursday.

IMF spokesperson Julie Kozack said inflation was on a path to meet the Federal Reserve's 2% target, but there were some risks that could push it higher, largely as a result of tariffs imposed on imports by the Trump administration.

"What we've seen over the past few years is that the U.S. economy has proven to be quite resilient. We do see now that some strains are beginning to show," she told a regular briefing. "Domestic demand has been moderating in the U.S., and job growth is slowing."

Kozack said the front-loading of imports early in the year in anticipation of tariffs had caused some volatility in economic activity in the first half, and tariffs were now adding to inflation risks.

As a result of the combined factors, she said, the IMF saw scope for the Federal Reserve to lower interest rates, although it should proceed cautiously, with an eye on emerging data.

She told a regular briefing that a downward revision in U.S. employment data announced on Tuesday was a "bit larger" than the historical average.

The U.S. government said 911,000 fewer jobs were likely created in the 12 months through March than previously estimated, suggesting that job growth was stalling before President Donald Trump's aggressive tariffs on imports.

Such revisions could be driven by a variety of factors, including statistical issues and some related to response and survey errors, she said, adding the issue would be discussed during the scheduled IMF review of the U.S. economy in November.

The Labor Department's inspector general on Wednesday said it was initiating a review of challenges that the Bureau of Labor Statistics faces in collecting and reporting U.S. economic data after it made large downward revisions to nonfarm payrolls and cut its inflation data collection.

Earlier sharp downgrades to May and June payroll figures angered Trump, prompting him to fire BLS Commissioner Erika McEntarfer and accuse her, without evidence, of faking the data. Trump has nominated E.J. Antoni, chief economist at the conservative Heritage Foundation, to replace her.

Kozack refused to be drawn on the credibility of U.S. data, saying only that the IMF strongly advocated for accurate, timely and reliable data from all its members.

"This kind of data transparency strengthens the credibility of economic management in all countries," she said.