With the stock market at an all-time high, a bonanza of cheap gasoline, and unemployment at 5.8 percent, there is increased optimism about the U.S. economy. Yet challenges abound, both from the inside and abroad.

Participation in the labor force remains at the lowest levels since the late 1970s, with over 6 million less people in the workforce since President Obama assumed office. The time of reckoning for the Fed is arriving. The Fed will likely begin introducing higher rates early this year. If it waits until 2016 it might risk causing a negative short-term impact just before the presidential election. With over $7 trillion of new borrowing no other president in U.S. history has increased the debt as much as Obama. Eventually these policies need to be reversed, causing painful readjustments.

One year ago I wrote that “national or international security threats, such as acts of terror or wars affecting the U.S. or its major allies” could impact the U.S. economy. We had two such major threats: Russian intervention in Ukraine and the rise of the Islamic State, ISIS. They both have increased uncertainty in the world and the U.S. economy. Economic actors need to ponder if the United States will get even more involved in overseas wars. Few forecasted the magnitude of the impact of increased oil and gas production in the United States. The reduction in the price of oil is strengthening the U.S. economy and reducing the power of Russia and the impact of ISIS and other nefarious Middle East forces.

Another challenge for the economy is the uncertain outcome of the political battles over healthcare and immigration. There are legitimate disputes about the cost and benefits of Obama’s policies. In addition to the economic costs, healthcare reform was one of the main reasons for the electoral loss of the Democrats during the 2014 midterm elections. The recent amnesty of a sizeable number of immigrants will not have a major economic effect in 2015. I still believe that there is a strong need to advance to a market-based immigration system respectful of the rule of law and human dignity, such as the Red Card solution.

I expect minor advances in free trade. Free trade is a major engine for growth but the increased politicization of the debate thwarts fast progress. The efforts to increase trade liberalization between the United States and Europe are moving slow. According to the Heritage Foundation’s Index of Economic Freedom, Europe and the United States have the best world regional scores on trade freedom. Europe scores 86.4 (where 100 is best) and the United States scores 86.8. Fraser Institute’s freedom index has most European countries and the United States scoring between 7 and 8 (out of 10).

The major government efforts to increase trade among developed countries are the Trans-Pacific-Partnership (TTP), mostly towards Asia, and the Transatlantic Trade and Investment Partnership (TTIP) with Europe. Both have many friends and foes. A major coalition of labor, environmental, and political NGOs close to Obama’s base oppose the deal. They are focusing on blocking fast-track negotiating authority to the administration. On the other hand, many corporations, from Exxon to Facebook, have their own TPP coalition to support the pact. Each of these coalitions have approximately 150 corporate and trade association members, almost all with lobbyists in Washington.

2015 should be a good year for the economy. The major economic challenges will come from corroding forces and not from a radical change in a policy or in an economic sector. The effect of increased arbitrary use of executive power, abuse by regulators, and the growing relevance of privileged forms of capitalism—usually labeled “crony” capitalism—have been taking down the United States in the rankings.

Respect for an impartial judicial system and property rights occupy an important place in the economic freedom indices. In 1980, the first year measured by the Fraser Institute index, the United States was in first place for its legal system and protection of property rights. It is 36^th in the latest. The score went down from 9.23 (10 being the best) in 2000 to 6.99 in 2012. In the Heritage index, respect for property rights in the United States went down from 4^th place in 2009 to 20^th today.

The trend is dangerous. Will the new Congress stop this gradual fall from exceptionalism to mediocrity? Too soon to tell. Lovers of free enterprise and the free society really hope so, but do not hold your breath. 2015 promises to be an interesting year.