The U.S. Economy: Inching Toward Its Potential Output and Employment

For a decade and a half, the U.S. economy has been operating below its potential. The labor participation rate has dropped from the high level of 67.3 percent in March of 2000 to 62.6 percent in September 2015. However, the trend has since reversed slightly to an average of 63 percent. This phenomenon may signal the reversal of stagnant labor productivity as the experience curve trends upward, lowering the cost of production and improving productivity.