The U.S. economy is poised to accelerate after a dismal start to the year even though the job market won’t return to full employment until 2017, the International Monetary Fund forecast in a report Monday.
The IMF noted that steady job gains and other recent data suggest the economy is rebounding. Employers have added 200,000-plus jobs for four straight months, and the unemployment rate has fallen to 6.3 percent. Auto sales and factory activity are increasing.
Yet growth this year isn’t likely to top last year’s lackluster performance, the IMF said. The Washington-based organization foresees the U.S. economy growing a modest 2 percent this year, below its previous estimate of 2.7 percent. That would be nearly identical to the 1.9 percent growth last year.
The IMF blamed the lingering aftermath of a brutal winter and a sluggish recovery in home sales. Years of disappointing growth mean the economy might not reach full employment — which many economists define as an unemployment rate between 5 and 5.5 percent — for three more years.
Christine Lagarde, the IMF’s managing director, suggested at a news conference that the past winter showed that another wild card — climate change — might be holding back the economy and could make predictions more difficult.
“Extreme weather occurrences have repeated much more frequently in the past 20 years than the previous century,” she said. “That’s a reason to wonder about climate change and how to deal with it.”
Yet the IMF is optimistic that a “renewed dynamism” will propel growth for the rest of the year, partly offsetting what many analysts think was a contraction of up to 2 percent last quarter.
Sen. Edward J. Markey (D-Mass.) said Monday that permits for exporting natural gas may violate the Energy and Policy Conservation Act of 1975, which banned overseas sale of oil or gas.
An executive order by President Gerald R. Ford in 1976 delegated rulemaking and exemption permits to the Commerce Department. Markey, a foe of liquified natural gas exports, said Commerce has not issued such guidelines.
Markey said the Energy Department’s seven LNG export permits and licenses for gas exports to Canada and Mexico through pipelines could be open to a lawsuit under the Administrative Procedure Act.
● U.S. manufacturing output rose in May at a solid pace, boosting hopes that the economy is expanding briskly after a dismal first three months of the year. Factory output rose 0.6 percent in May after dipping 0.1 percent the previous month, the Federal Reserve said. April’s figure was revised upward from an initial estimate of a 0.4 percent decline. Overall industrial production, which includes manufacturing, mining and utilities, also rose 0.6 percent in May. It had fallen 0.3 percent in April.
● A New York State Supreme Court judge ruled in favor of Macy’s claim that J.C. Penney interfered with a merchandising contract with Martha Stewart Living Omnimedia when it cut a deal in 2011 under its previous chief executive to create a collection of home goods. But the judge, Jeffrey Oing, said Macy’s failed to prove that J.C. Penney was liable for punitive damages since the actions weren’t “malicious” or “immoral.” Macy’s is still entitled to attorney’s fees and other monetary damages from J.C. Penney related to the selling of a line of bath towels, pots and other products that were designed by Martha Stewart but were sold under the JCP Everyday name last year.
● A day before he was scheduled to begin serving a two-year prison sentence for insider trading, former Goldman Sachs Group director Rajat Gupta asked a federal appeals court to reduce a $13.9 million civil penalty and shorten his lifetime ban from serving as an officer of a public company. Gupta’s attorney, Seth Waxman, told the U.S. Court of Appeals for the 2nd Circuit in New York that the penalty was excessive because Gupta separately was ordered to pay $6 million in restitution to Goldman Sachs and $5 million in criminal fines.
● U.S. home builders are feeling more confident about the housing market but don’t think it is healthy. The National Association of Home Builders/Wells Fargo builder sentiment index rose to 49 in June, its highest since January and up from 45 in May. Readings below 50 indicate that builders view sales conditions as poor. The index has been stuck below 50 since January.
● Three companies announced plans to bring a combined 7,100 jobs to South Carolina’s Interstate 77 corridor, though many of those jobs are moving just minutes south from Charlotte. Gov. Nikki Haley (R) called the back-to-back-to-back news conferences the “ultimate hat trick.” York County Council Chairman Britt Blackwell said the projects build momentum in transforming the region between Charlotte and Columbia, S.C. They consist of one manufacturing plant and two office campuses.
● Mississippi sued Experian, the world’s largest firm that collects detailed information about consumers to evaluate their financial trustworthiness. Mississippi Attorney General Jim Hood’s complaint accuses Experian Information Solutions of knowingly including error-riddled data in the credit files of millions of Americans, jeopardizing their ability to obtain loans, pass employment-related background checks and obtain government security clearances.
● 8:30 a.m.: Consumer price index and housing starts for May.