The International Monetary Fund has downgraded its forecast for the U.S. economy this year, predicting growth will be limited to 1.5 percent. That's one percentage point lower than its previous projection.

In a report released Tuesday, the IMF says several factors prompted the downgrade, including subdued consumer and business confidence, a stagnant labor market, a weak housing market, and a government debt crisis that has triggered financial market turmoil.

The IMF says the “first priority” of the U.S. government should be to commit to a “credible fiscal policy” that puts the country's massive public debt on a “sustainable track.” It says the White House and Congress must agree on a “medium-term debt reduction plan” to avoid a sudden collapse of market confidence that would disrupt global economic stability.

The global lending agency predicted U.S. unemployment will remain above 9 percent next year. The jobless rate was 9.1 percent in August. Persistently high unemployment has dampened consumer spending, the biggest part of the U.S. economy.

The latest U.S. government report on the housing market says construction of new homes fell more than expected in August. The Commerce Department said Tuesday U.S. housing starts declined 5 percent from July, to a seasonally-adjusted annual rate of 571,000 homes.