The International Monetary Fund is paring back its forecast for the U.S. economy this year, judging a strengthening recovery will only partially offset the first quarter's dismal performance.
In a forecast released Monday, the IMF predicted the economy will grow 2% this year, barely better than its 1.9% growth in 2013. It previously projected 2.8% growth in April.
A harsh winter whipped the economy in the first quarter, leaving it shrinking at an annual rate of 1%, according to the government's most recent estimate. But many economists suspect the decline will actually turn out to be closer to 2% when the Commerce Department releases its final estimate next week.
Recent data suggest "a meaningful rebound is now underway and growth for the remainder of this year and 2015 should well exceed potential," the IMF said.
It projects 3% economic growth in 2015. The IMF forecasts the unemployment rate — 6.3% in May — will fall to 6.2% this year and to 5.9% in 2015. Inflation as measured by the consumer price index will run at 1.9% this year and 1.8% next year, it said.
"With better growth prospects, the U.S. should see steady progress in job creation," the IMF said.
Even so, the jobless rate will decline slowly because the labor market's improved vigor will pull more discouraged workers back into the labor force as they resume their job searches while long-term unemployment will take time to return to historic levels, the IMF said.