WASHINGTON, Sept. 21 - The United States is posed for slower growth next year, and its rapidly rising foreign indebtedness is at the heart of dangerous global imbalances, the International Monetary Fund said today.

In its sharpest warning yet, the I.M.F. said that the global economy was increasingly at risk for a wrenching correction to the imbalances between the United States, which is consuming far more than it produces, and slow-growing regions like Europe and Japan.

In a clear reference to the United States, with its big budget deficits and relentless consumer spending, the I.M.F. warned that global demand is "fueled by increasingly unsustainable fiscal stimulus, as well as housing prices that are ignoring the laws of gravity."

But it also bluntly criticized the European Union - which it said would continue to grow at an anemic pace - for failing to relax rigid labor laws and for expansive welfare systems.

"Europe's citizens do not seem convinced that the bitter medicine of continued structural reforms will cure the stasis that afflicts much of the continent," said the I.M.F.'s director of research, Raghuram G. Rajan.

"It is a failure of politics that people have not come to see that the more they want to retain the attractive European way of life, the more the way they want to work will have to change," he said.

Over all, the I.M.F. predicted that American economic growth would slow to 3.3 percent in 2006, down from more than 3.5 percent this year.

The I.M.F.'s economists did not expect Hurricane Katrina to put a major dent in the national economy, shaving growth by just one-tenth of a percentage point.

But they expressed considerable worry about the impact of high oil prices, which have shot up by more than $20 a barrel this year and are hovering around $65 a barrel. Indeed, the I.M.F. warned that another surge in oil prices - perhaps to $80 a barrel - remains possible.

The economy of the 12 European nations that use the euro as a common currency will expand only 1.8 percent next year, up from an even weaker pace of 1.2 percent in 2005, the I.M.F. said.

Japan, which has had nearly stagnant growth for the past decade, was the only positive surprise in the I.M.F.'s global forecast. With signs that Japan's downward spiral in consumer prices is nearly over, and consumption rising, the I.M.F. predicted that Japanese output would climb 2 percent next year. Six months ago, it predicted that Japan would have no growth at all.

In its report, released in advance of the International Monetary Fund and World Bank annual board meetings this weekend, the I.M.F. ratcheted up its previous warnings about global imbalances.

The United States' trade deficit is expected to approach $700 billion this year and is likely to exceed 6 percent of its gross domestic product. Put another way, the United States is soaking up a record share of the world's savings. As it has in the past, the I.M.F. said the United States' financial imbalance had been aggravated by the government's large fiscal deficits.

Even without the huge expected federal costs for rebuilding in the wake of Hurricane Katrina, the I.M.F. said, the Bush administration's goal for deficit reduction "remains unambitious."

President Bush and Republican leaders in Congress have begun to propose new spending cuts to offset part of the cost of Hurricane Katrina. But administration officials today continued to call for making President Bush's tax cuts permanent, which would cost at least $1.4 trillion over 10 years, and they have opposed proposals to delay the implementation of Medicare's big new prescription drug program, which is expected to cost about $45 billion a year.

"We want to be sure that the way we address the imbalances maximizes growth," said Timothy Adams, undersecretary of the Treasury for international affairs. "It's a shared responsibility."

The I.M.F. agreed with that, at least in part. It blamed much of the widening global imbalance on Europe and Asian countries, noting that domestic demand in Europe remained extremely weak and left the United States as the world's engine for consumption growth.

It warned, too, that Europe's weakness made the Continent more vulnerable to shocks from oil prices, higher global interest rates or a big change in currency exchange rates.

Commentary:
The Times continues its right wing bias once again, reporting nothing about the massive deficits republicans gave us prior to Katrina. It's because of newspapers like the Times that most Americans will come to believe Katrina is the cause of our record deficits when in fact, Bush's tax cut are the sole cause.

Note how the media does deficit and debt stories ONLY when conservatives in congress say something about it. Also note that the same republicans who are opposed to adding to our debt to help the South had no problem adding to debt to help the very rich who just happen to live in mostly the North. In other words, deficit spending is good when the money goes to rich people and bad when it goes to people who need it.