Lagarde cheers "much stronger outlook" for US in 2014 The International Monetary Fund is raising its outlook for the US in a sign that the world's largest economy has reached a turning point and is poised for stronger growth almost five years after a devastating recession. Christine Lagarde, the managing director of the IMF, delivered a bullish forecast for US growth, saying that a budget deal by the US Congress, strong data and the Federal Reserve's plan to taper bond buying had given the world "a lot more certainty for 2014." Growth is picking up and unemployment is going down. So all of that gives us a much stronger outlook for 2014, which brings us to raising our forecast," she said on NBC's Meet the Press on Sunday. Ms Lagarde's rosy assessment follows a week of promising signs for the US economy. The passage of a two-year budget deal signalled that longstanding political gridlock on fiscal issues in the US capital had eased, at least temporarily, while data showed the economy grew at its fastest rate in nearly two years in the third quarter. The Federal Reserve, meanwhile, has announced a scaling back in its $85bn-a-month monetary stimulus in what was seen as recognition that the US economy was finally delivering sustainable growth. President Barack Obama capped the week with an end-of-year press conference in which he declared: "America is poised for a breakout." Ms Lagarde said the Fed's decision to taper asset purchases, announced about a month before Janet Yellen was due to take the helm of the central bank, pending final Senate approval, was evidence that the economy was picking up and that the unemployment rate would decline. Unemployment will continue to go down. It's around 7 per cent. It's likely to move toward the high 6 per cent, but certainly will continue to move down," Ms Lagarde said. However, she noted that the so-called participation rate - an indicator of how many people were joining the job market and finding jobs - was not increasing. Ms Lagarde also emphasised the need to make sure there was adequate "redistribution" of wealth in order to keep growth robust. "There is a clear indication that rising inequality leads to less sustainable growth," she said. Ms Lagarde said the two-year budget agreement was a sign of "responsibility, accountability and realism," but warned of the consequences of another political battle over an increase to the US borrowing authority, also referred to as the debt ceiling. "I, for myself, certainly hope that in February, Congress will be equally responsible and will not threaten the recovery with yet another debate about whether or not the US will honour or default in February," she said. February 7 is the date by which an increase to the borrowing limit would have to be agreed. The Obama administration has said it will not negotiate concessions with Republicans in exchange for an increase, risking a potential US default. Although some Republican leaders have insisted that any increase would have to be accompanied by an agreement to cut spending, most analysts believe that Republicans would not engage in a stand-off that would allow the US to default on its debts just months ahead of the 2014 congressional elections. The timing could be delayed until June or July with the Treasury using "extraordinary measures" to shift US funds so that the necessity for new borrowing authority can be delayed as long as possible.