US GDP is expected to grow 1.5 per cent this year and hit a record low in 2017, but the outlook for 2018 will be even bleaker, with the economy contracting 2.4 per cent and the unemployment rate at 8.9 per cent, according to the International Monetary Fund (IMF).
The IMF forecasts US gross domestic product (GDP) will be 1.4 percent higher in 2018, with unemployment at a record 6.2 per cent.
In the latest estimate released on Friday, the IMF also projected that the federal government would spend 1.2 trillion in 2018 on benefits for employees, while the government would borrow 1.1 trillion.
Unemployment in the US has fallen from 8.5 percent in November, before the hurricanes Harvey and Irma hit, to 5.2 percent in September.
The government expects to borrow $5.9 trillion in 2019 and $7.3 trillion in 2020, with a further $2.5 trillion to be borrowed in 2021 and 2022.
The IMF expects that by 2023 the government’s debt-to-GDP ratio will have fallen below 70 percent.
The federal government is also planning to cut spending in 2017 to $2 billion a day, down from $4.7 billion a week earlier.
The cuts will come as the economy shrinks by 2.3 percentage points to 2.5 percentage points in 2018 and 2019.
This is the first year since 2008 that GDP has not grown faster than 2.6 per cent for the first quarter.
In 2018, the unemployment has risen from 7.9 percent in October to 11.3 percent in March.
The increase is due to people seeking jobs, and the lack of a robust labour market.
On Wednesday, the US government said it would cut its budget for the fiscal year starting in October 2018, to $4 trillion, to save $1.7 trillion over 10 years.
US Treasury Secretary Steven Mnuchin said the US economy would see growth of 0.8 per cent in 2019, down 0.3 per cent from the previous year, and an increase of 0,5 per second in 2020.
The unemployment rate will fall from 8 per cent to 7.5 by 2021.
The economy is also expected to be stronger in 2024 than it was in 2019.
But it will be slightly weaker than it is now, the Treasury said.
The Fed is expected this week to release its next economic update, which is expected later in the year.