Today’s jobs report shows that the economy continues to move in the right direction. Payroll employment increased by 178,000 jobs, and nominal wages grew 2.5 percent over the year. On its face, the precipitous drop in the unemployment rate from 4.9 percent to 4.6 percent would suggest a positive sign, but it appears to be largely due to a drop in labor force participation. As the economy continues to strengthen, we would expect an increase in labor force participation and an increase in the employment-to-population ratio. It remains to be seen if this is just a hiccup as we move closer to full employment.

While we still have more work to do, full employment is on the horizon. At this rate of payroll employment growth, we could conceivably see full employment and accompanying stronger wage growth as early as next year. The recovery from the Great Recession has been slow, but remarkably steady. While there will no doubt be a lot of talk about the role that the incoming president plays in the economy, it’s important to remember that the seeds of full employment were sown over the last several years.