David Doyle, an analyst with Macquarie Capital Markets, thinks the U.S. economy could be at full employment within a year.
First, he estimates the amount of people who are likely to return to the labour force and adds that to the number of people currently looking for work but cannot find it.
That group consists of about 21.1-million Americans.
He then factors in that 55,000 jobs per month need to be added just to keep up with the growth of the population.
Under Doyle’s calculations, if non-farm payrolls rise by 250,000, labour slack will be reduced by 195,000.
After 11 months, that would bring the unemployment rate down to 4.9 percent.
Here’s his math:
Non-farm payroll growth has averaged 248,500 over the past 12 months.
Full employment, which Doyle claims would be achieved if this came to pass, is the state at which no one is without a job due to a lack of demand in the economy.