(Washington, D.C.) The International Monetary Fund (IMF) indicated that the U.S. federal government shutdown will negatively impact the economy, predicting that U.S. economic growth in the fourth quarter will be lower than the 1.9% forecast in October. However, the lack of data due to the shutdown has affected the IMF's ability to assess the U.S. economic performance.
IMF spokesperson Kozak said at a regular press conference on Thursday (November 13): "The U.S. economy has shown resilience in recent years, but pressures are beginning to intensify. Domestic demand is weak, and job growth is slowing. Reduced immigration, tariffs, and broader policy uncertainty are all factors that are weighing on U.S. economic activity."
She said the record 43-day partial government shutdown negatively impacted U.S. economic growth in the fourth quarter, but this impact could reverse in the first quarter of 2026.
Kozak reiterated the IMF's view that U.S. inflation is moving toward the Federal Reserve's 2% target, but tariffs have increased upside risks to inflation, and slowing job growth further complicates the Fed's monetary policy options.
She said, "Therefore, the Fed has appropriately lowered policy rates in recent months… We believe the Fed will need to remain cautious in weighing the upside risks to inflation against the downside risks to the labor market."
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She pointed out that although the rate of price increases has slowed, high price levels "are causing pain to certain groups in society."
Regarding the impact of the Trump administration's boycott of the G20 leaders' summit in South Africa from November 21-23, Kozak said that the forum remains an important platform for the world's major economies to "gather expertise and work together to solve common problems."
On the evening of November 12, the U.S. House of Representatives passed a temporary federal funding bill that had previously been approved by the Senate. The president subsequently signed the bill, ending the record-breaking 43-day shutdown. The Congressional Budget Office had previously estimated that the six-week shutdown would cost the U.S. approximately $11 billion (S$14.3 billion) in economic losses.
White House National Economic Council Director Kevin Hassett said on Fox News on Thursday that the shutdown is estimated to cost the U.S. economy about $15 billion per week, and the expected losses could cause the annualized GDP growth of the U.S. to contract by 1 to 1.5 percentage points in the fourth quarter of 2025.
Hassett also said the government will release the much-anticipated October jobs report, but because no household surveys were conducted in October due to the government shutdown lasting several weeks, the report will not include unemployment data.
