Dealing with Long Term Deficits. Martin Feldstein, January 2016, Paper. "The United States economy is now in good shape. We are essentially at full employment with the overall unemployment rate at 5.0 percent and the unemployment rate among college graduates at a very low 2.5 percent. The near zero overall rate of inflation is distorted by the sharp decline in energy prices. The core CPI inflation rate that excludes the prices of energy and food has increased by 2.0 percent over the past 12 months. The growth of demand in 2016 will be limited by the absence of excess capacity in the economy rather than by a lack of demand. Household spending will support real domestic demand growth of two percent or more because real earnings are rising at two percent, house prices are increasing in real terms, and employment prospects are good ..."