America’s New Growth Playbook: Self-Reliance, Jobs, and Fiscal Roadblocks
IMF staff’s 2026 Article IV for the United States finds that the 2025 policy shift toward domestic self-reliance—emphasizing domestic manufacturing and energy, tighter immigration, deregulation, and tariff use—supported 2025 growth around 2.2% with unemployment near 4.3% in January 2026. Tariffs provide near‑term revenue but can raise inflation and dampen output; stricter immigration reduces the foreign-born labor supply and lowers activity, while deregulation and energy-focused policies boost dynamism. The outlook projects ~2.4% growth in 2026, core PCE inflation returning to 2% by 2027, and unemployment near 4% through 2026–27, but the current account deficit and NIIP are expected to widen and the debt-to-GDP ratio to rise toward about 140% by 2031 unless a credible frontloaded fiscal consolidation and revenue reforms are enacted. An alternative policy mix—permanent investment expensing, a destination-based tax, more open skilled immigration, and targeted safety-net reforms—could raise employment, reduce deficits and external imbalances, and improve distributional outcomes. The Fed should proceed gradually, maintaining policy credibility and financial stability as regulation and digital assets evolve.
