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Monetary stimulus from the Federal Reserve, while under fire from some Republicans, is also helping offset the fiscal contraction.
Monetary stimulus from central banks has been a major contributor to Wall Street's gains this year, lifting the S.&P.
Expectations for more monetary stimulus from central banks in the United States and Europe have underpinned markets in recent weeks.
The reports were consistent with only moderate economic and job growth, however, and they kept alive the prospect of additional monetary stimulus from the Federal Reserve.
Jamie Cox, managing partner of the Harris Financial Group in Richmond, Va., is among those anticipating further monetary stimulus from the Fed.
It led some economists to consider ratcheting back forecasts for economic growth and spurred traders to ramp up bets on further monetary stimulus from the Federal Reserve.
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Thus, they provide the logic for the additional monetary stimulus resulting from the Fed's policy of quantitative easing.
The rising stock market is largely attributable to monetary stimulus measures from the Federal Reserve, which buy time for the economy to recover but are not a cure-all for slow growth.
But while the gains from monetary stimulus are small, the potential harm is significant.
"Clear communication on the eventual exit from monetary stimulus will help reduce volatility in global financial markets," the IMF added.
With wages still barely rising, families have tended to save, and increases in demand from monetary stimulus have been weaker than expected.
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