The US outperformed the rest of the world economy in every year leading up to 2004—quite handily in most years. But in 2000, the US’s performance began to slip, even as the world’s average EPI score started to rise. By 2004, the US was no longer on top; the rest of the world was performing, on average, better than the world’s only remaining superpower. In 2009, the US EPI fell to 74.5%, the lowest score since the Great Depression. The world economy turned into the Great Depression, with the world EPI score falling to 82.2%.
The Fed’s policy of low interest rates and the government’s fiscal support have provided major economic stimulus to the economy since the 2008 crisis. The economy has been showing signs of robust growth and low unemployment levels in the past few years. The Fed began hiking rates in 2015, after strong signs that the economy was on the path to recovery. The housing sector is continuing to recover as well, with housing prices recovering to the pre-crisis levels.
The economy as a whole returned to pre-recession performance in 2015. In 2014, the US and the world economy received almost the same score—90.5% for the US and 90.7% for the world. But in 2015, the US outperformed the world EPI average scoring with 93.3% vs. 91.1%.
Since we noted that the US’s descent began in 2000, we went back to that year to look at the average performance of the world’s major economies. If we graph the US’s position in the world EPI ranking since 2000, we can see the gradual decline until 2010 and then a fast recovery in the ranking.
The US ranking went up from the 38th position in 2011, ranking just four spots ahead of dead last, to the 19th position in 2015.
But these forty-two countries include some of the fastest-growing emerging markets in the world; notably, China. Is it really fair to compare the recovering US economy to those economic powerhouses? Perhaps we should break those countries out into small segments so we can compare the US against its peers: other advanced economies not enjoying the rapid growth of emerging markets (see chart below).
When we separate the world’s economies into their respective peer groups, we see a similar but still familiar story. The US remains the global leader, outperforming these economic groups in terms of how fast it has been recovering from the slump in 2009. Still, the US was hit the hardest relative to other advanced economies and emerging markets. Currently, the US is outperforming emerging markets and Eurozone economies but is lagging behind other advanced economies overall.
