The United States should be ready with fresh monetary and fiscal stimulus packages to prop up the economy should its expected recovery falter, the International Monetary Fund (IMF) said.
The IMF said the U.S. economy will recover but gradually, and that credit should be made available if needed.
“If downside risks materialize, additional credit easing and a strengthened commitment to maintaining a highly accommodative monetary stance could be considered,” the IMF said in a statement..
“Additional fiscal stimulus could also be used, although the immediate focus should be on implementing the current fiscal measures and monitoring their impact.”
Talk of more stimulus packages in the United States has some worried that deficits could get out of hand.
Even the IMF itself has said that the U.S. should start planning exit strategies with its current stimulus while at the same time consider having another stimulus package ready if needed.
"We should emphasize that now is not the time to implement the exit, but it's a good time to be developing and communicating exit strategies to underpin confidence," said Charles Kramer, head of the IMF's North America division, according to Reuters.
Weak labor and housing markets will continue to dampen the economy, and the two could complement one another to further slow recovery and fuel uncertainty, the IMF added.
"The weakness in the labor market is going to reflect into the weakness in the housing market,” said Marcello Estevao, the IMF's North American division deputy.
“When people lose jobs, wages don't grow as much, it's harder for people to pay their mortgage,” Estevao told Reuters.
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