America's budget wrangling is holding back recovery in the world's largest economy, according to a leaked draft of forecasts from the International Monetary Fund that coincided with data showing a dip in consumer confidence and weaker spending in the nation's shopping malls.
Official figures from Washington showed that retail sales in March dipped by 0.4% in March – worse than Wall Street had been anticipating and the second monthly fall since payroll taxes and income tax rose at the start of 2013.
Chris Williamson, economist at Markit, said: "This weakness is possibly linked to increased payroll and income tax hikes which took effect at the start of the year, and will inevitably add to worries that the US economy is slowing as we move into the spring as automatic budget spending cuts come into force.
With this in mind, the Fed will be more cautious about sending signals that it is preparing to ease back on policy stimulus."
Meanwhile, the monthly snapshot of sentiment conducted by Michigan university showed consumer confidence dropped to its lowest in nine months.
The downbeat news came as the Bloomberg news agency reported that the International Monetary Fund would trim its growth forecast for the US in next week's half-yearly World Economic Outlook.
Bloomberg said a leaked draft of the WEO showed that growth in the world's biggest economy would be 1.7% in 2013, down from 2% in January when the IMF last updated its predictions.
The report said automatic cuts as part of the deal between the White House and Congress to tackle America's budget deficit were the reason for the lower forecast for US growth this year.
Action by Tokyo to combat inflation has led to the Fund increasing its estimate of Japanese growth in 2013 from 1.2% to 1.5%, but there has been no change in its forecast of a 0.2% contraction in the eurozone economy.
The forecasts may be updated before their official release next Tuesday, but the draft leaked to Bloomberg has the global economy expanding by 3.4% in 2013, down from 3.5% in January.
guardian.co.uk
Official figures from Washington showed that retail sales in March dipped by 0.4% in March – worse than Wall Street had been anticipating and the second monthly fall since payroll taxes and income tax rose at the start of 2013.
Chris Williamson, economist at Markit, said: "This weakness is possibly linked to increased payroll and income tax hikes which took effect at the start of the year, and will inevitably add to worries that the US economy is slowing as we move into the spring as automatic budget spending cuts come into force.
With this in mind, the Fed will be more cautious about sending signals that it is preparing to ease back on policy stimulus."
Meanwhile, the monthly snapshot of sentiment conducted by Michigan university showed consumer confidence dropped to its lowest in nine months.
The downbeat news came as the Bloomberg news agency reported that the International Monetary Fund would trim its growth forecast for the US in next week's half-yearly World Economic Outlook.
Bloomberg said a leaked draft of the WEO showed that growth in the world's biggest economy would be 1.7% in 2013, down from 2% in January when the IMF last updated its predictions.
The report said automatic cuts as part of the deal between the White House and Congress to tackle America's budget deficit were the reason for the lower forecast for US growth this year.
Action by Tokyo to combat inflation has led to the Fund increasing its estimate of Japanese growth in 2013 from 1.2% to 1.5%, but there has been no change in its forecast of a 0.2% contraction in the eurozone economy.
The forecasts may be updated before their official release next Tuesday, but the draft leaked to Bloomberg has the global economy expanding by 3.4% in 2013, down from 3.5% in January.
guardian.co.uk
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