Fed Study of Labor Participation Finds U.S. at Full Employment

A study from the Federal Reserve Bank of San Francisco found the U.S. labor market to be at full employment, reports Bloomberg . "Our estimates indicate that the aggregate labor force participation rate is at its trend as of 2018," said the San Francisco Fed in an Economic Letter. "Combined with the low unemployment rate, this argues that the U.S. labor market is operating at or beyond its full potential." According to the study, the labor force participation rate since 2015 had stabilized around 62.8 percent. The San Francisco Fed examined the underlying changes in the U.S. population, which led to the conclusion that this level represents the long-run trend level of labor force participation. The regional bank also predicted this would decrease by about 2.5 percentage points over the next decade. "Almost the entire projected future decline is driven by population aging," the study authors wrote.