The U.S. labor market is near or beyond full employment according to a Federal Reserve report.
“The labor market in early 2018 appears to be near or a little beyond full employment,” the Fed said in the February 2018 Monetary Policy Report published in Washington on Friday. “The unemployment rate is now somewhat below most estimates of its natural rate.”
The report noted that the labor force participation rate, a measure of what percent of the working age population either has a job or is looking for one, has been mostly unchanged over the past four years, “representing an important cyclical improvement relative to its declining trend.”
“The current level” of the participation rate “is relatively close to many estimates of its trend,” the report said. While the participation rate for prime-age men remains below its pre-recession levels, that “seems to reflect the continuation of a decades-long secular decline rather than a cyclical shortfall.”
The Fed said that despite reports employers are having difficulty finding qualified workers, “hiring has continued apace,” and wage gains have been moderate. “Serious labor shortages would probably bring about larger increases” in wages “than have been observed thus far.”