IMF Kneecaps U.S. Growth in New Forecast—We Just Received the Worst Downgrade In the World…

Well, there it is. The IMF just downgraded its U.S. growth forecast for 2025, and it’s directing to a complete nosedive. Simply put, from a previously projected 2.7% to a now thoroughly pathetic 1.8%, the IMF is downright hinting at a 0.9 point swing in the wrong direction (with its biggest downgrade among all the advanced economies). 

Live look at me right now…

(Source: Giphy) 

Why the downgrade? Please God, don’t make me say it again… it’s because of tariffs. Shocker. The Trump administration’s April 2 tariff bomb triggered a cascade of economic whiplash that even the IMF couldn’t ignore. Now yes, those tariffs were “suspended,” but in the real world, you don’t get to un-punch a market in the face. The damage was done. Other countries retaliated, the S&P 500 tanked 9% in the aftermath, and now the IMF is left trying to slap a Band-Aid on a self-inflicted bullet wound. 

Their chief economist, Pierre-Olivier Gourinchas, laid it out with all the dryness of a man who’s seen too much. Tariffs, he said, are a “negative supply shock.” Productivity drops, costs rise, and the result is exactly what you’d expect when a country's margins get crushed—they lose their collective minds. Which again, is why this wasn’t a normal forecast. It was cobbled together in less than 10 days. Normally the IMF spends two months building these reports. This one? A rush job, because the policy chaos demanded it. And you can feel it in the tone. It was less cautious optimism, and more panic wrapped in footnotes. 

(Source: PYMTS) 

Speaking of footnotes, the IMF believes inflation is also getting worse, which is great news if you like your economy hot and your purchasing power weak. The IMF now expects U.S. inflation to hit 3% in 2025, up from 2%. And that’s not just food and fuel, it’s core goods and services that are dragging it higher too. The tariffs, again, make this worse. Whether companies eat the costs or pass it along depends on how aggressive they want to be about screwing the customer. Spoiler: they usually don’t volunteer to take the hit.

What’s more is that the IMF’s global growth forecast also got cut from 3.3% to 2.8%. Not that it matters, because the U.S. downgrade is the headline here. But still, short term pain is worth the long term growth (should it play out that way). However, if you’re running a business or trading through this, the message is simple: uncertainty is the new normal. Especially considering Donnie Politics could give a rats a$$ what the IMF thinks. 

(Source: Giphy) 

But don’t think for a second the market isn’t going to keep flinching every time someone opens their mouth about trade. Meaning, you can either sit around waiting for policy stability that’s already bipolar, or you can adapt and survive. As for today, we have a heater of a rally on our hands as Wall Street hopes for de-escalation for tariff tensions (why can’t we do this everyday? Hope is powerful). 

But even with the rally, this downgrade didn’t come out of nowhere. There’s definitely a reason for it, and they aren’t wrong in their thinking. Let’s just all hope and pray they are wrong about the outcome. For now, keep your eyes on this story and place your bets accordingly. Until next time, friends… 

P.S. Oh, I’m sorry, I didn’t know you liked getting rekt. Let’s face it, retail investors get the short end of the stick all day everyday. It’s the smart money’s world, and we are just living in it–only useful when it comes to liquidity purposes in the market. Meaning, if you’re as pissed off as I was when I found out Milli Vanilli was lip syncing the whole time, then it’s time to go from investing blind, to investing smart. Luckily for you, the key is right here as a Stocks.News premium member. Click here to see exactly how our premium members are printing while others quake in the face of today’s market chaos. 

Stocks.News does not hold positions in companies mentioned in the article.