Many economists have been indicating that the economy is approaching full employment. This doesn’t mean that the unemployment rate will soon be zero – it means that we are approaching a situation in which a tighter labor market will eventually translate into more inflation, which in turn will produce higher interest rates.
According to the Bureau of Labor Statistics, America added another 227,000 nonfarm jobs in January, the largest gain since September. Job growth over the past three months has averaged more than 180,000 jobs, in line with trends in early 2016. Despite the ongoing addition of net new jobs, unemployment has been ticking higher recently and now stands at 4.8 percent.
That’s because more Americans are being drawn into the labor force and have begun looking for work. In addition to those who are unemployed, there are about six million Americans working part-time because they can’t secure a full-time job. This suggests that we still have quite a few months before we achieve full employment.