• The U.S. economic performance has been solid. The economy has fully recovered from the financial crisis of 2008-2009, according to the EPI score.
• The EPI score is projected to be 93.2%, or a B grade, in 2016, almost the same level as in 2015.
• The 5-Minute Economist projects the United States’ EPI score to stay around the current levels of about 93%, or a B level, in the next few years.

The Fed’s policy of low interest rates and the government’s fiscal support 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 last year, after strong signs that the economy is on the path to recovery. The housing sector is continuing to recover as well, as housing prices have recovered to pre-crisis levels.

The economic recovery continues to be underpinned by strong economic fundamentals, although there are considerable uncertainties, both domestic and external, that might weigh on the U.S. economy, with potential repercussions for the global economy and financial markets elsewhere. These include the timing and pace of interest rate increases, prospects for the dollar, and risks of weaker global growth.

The U.S. was hit hard by the 2008-09 financial crisis when EPI was close to 75%, or a D level, but the economy has almost fully recovered to the pre-2009 crisis levels this year. GDP growth has been increasing and is on a solid path now of about 2.5-3% a year, a so-called “new normal” of relatively low growth rates for the U.S. The unemployment rate has been falling from 9.6% in 2010 to about 5% in 2015. Inflation has continued to run below the Fed’s longer-run objective of 2%, partly reflecting declines in energy prices. The government deficit fell from more than 13% of GDP in 2009 to below 4% in 2015.

The 5-Minute Economist projects the United States’ EPI score to stay around the current levels of about 93%, or a B level, in the next few years. Inflation pressures remain muted, mainly due to the dollar appreciation and cheaper energy costs.

Inflation is likely to start increasing gradually from almost zero percent this year to closer towards the Federal Reserve’s 2% objective by mid-2017. Driven by robust economic growth and a strong hiring by the private sector, the unemployment level is likely to stay below 5% in the next few years.

The government has been winding down its fiscal stimulus program and the budget deficit is projected to decrease to about 3.5% in the next few years.  GDP growth will gradually increase but will stay below 3%, as interval drivers of the economy and high levels of private and government debt would limit the speed of economic growth.