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Labor force growth, breakeven employment, and potential GDP growth, Accessible Data
Figure 1. Potential labor force growth and its components
This is a combination chart showing annual data from 1960 to 2026. The y-axis shows annual rate from -1 to 3. The chart displays three elements: a red line representing potential labor force growth (percent change), gray bars showing population change contribution (p.p.), and blue bars depicting potential LFPR change contribution (p.p.).
The red line begins around 1.5 percent in the early 1960s, rises during the late 1960s and early 1970s to hover around 2.5-3 percent during the 1970s, then follows a generally decreasing trend through the subsequent decades. The gray bars (population change contribution) remain positive throughout the entire period, starting higher in earlier decades and gradually becoming smaller over time. The blue bars (potential LFPR change contribution) are positive from the mid 1960s to the late 1990s, then become negative from around 2000 through 2020, before hovering just below zero through 2026. A vertical dashed line marks the end of 2025, with data points extending beyond this line into 2026, where potential labor force growth (red line) falls to nearly zero as a result of a collapse in population growth (the gray bar).
Note: The population change is the change in the civilian noninstitutional population ages 16 or older constructed as described in Appendix A. The potential LFPR is from CBO (2026). The potential labor force is the product of these measures of the population and potential LFPR. The key identifies bars in order from top to bottom.
Figure 2. Breakeven pace of employment growth
This is a line chart showing quarterly data from 1960 to 2026. The y-axis ranges from monthly changes of -150 to 350 thousand. The chart displays two elements: a black line representing "Breakeven employment growth" and a gray shaded area representing the "90-percent confidence interval." The breakeven employment growth line begins around 100 thousand in 1960, rises to fluctuate between 150-200 thousand in the 1970s and early 1980s, then shifts down such that it generally fluctuates between 100-160 thousand through the 2000s. After 2000, the line generally moves downward until spiking back up in 2023 and 2024 to over 150,000, but then declining sharply, with the line dropping to near zero by 2026. The gray shaded confidence interval surrounds the black line throughout by a bit over +/- 100 thousand, with the lower bound of the confidence interval falling below -100,000 in 2026.
Note: The breakeven pace of employment growth is constructed using the change in the potential labor force, as shown in Figure 1, times one minus the noncyclical rate of unemployment from CBO (2026) (see Appendix C for more details). The 90-percent confidence interval is derived from the BLS's estimate of the standard error in its measure of the change in total payroll employment (see BLS 2026).
Figure 3. Potential GDP growth decomposition
This is a stacked bar chart with a line overlay showing annual data from 1960 to 2026. The y-axis displays annual rates, ranging from 0 to 6 percent. The chart presents three variables: red horizontal lines indicating potential output growth (percent change), light gray bars indicating labor productivity growth contribution (p.p.), and blue bars indicating potential employment growth contribution (p.p.).
The red lines in the chart show that potential output growth was highest in the late 1960s, reaching 4.5 percent. Since then, there has been a general downward trend with fluctuations. The contribution from potential employment growth (blue bars) was more substantial during the 1970s and has generally decreased over time, while labor productivity growth (gray bars) has generally contributed a significant portion to overall potential growth, particularly during the 1960s and late 1990s. Potential output growth reached its lowest level, 1.3 percent, in 2010. Thereafter, it began moving back up, reaching over 2.5 percent in 2023 and 2024. The most recent data point shows potential GDP growth slowing sharply in 2026 to just below 1.5 percent due to the contribution from employment growth being significantly smaller as compared to all other years.
Note: Labor productivity is the ratio of the CBO's estimate of potential output and either our constructed measure of potential employment (from 1960-2025) or the CBO's estimate of potential employment (in 2026). Our constructed measure of potential employment is the product of the labor force measure shown in Figure 1 and the potential employment rate implied by the noncyclical rate of unemployment from CBO (2026). Potential GDP growth (from 1960-2025) is the Q4/Q4 percent change in the estimate of potential GDP from CBO (2026). In 2026, potential GDP growth is the sum of the contributions from our measure of potential employment growth and the growth in the CBO's implied measure of labor productivity—specifically, the ratio of its measures of potential output and potential employment. The key identifies bars in order from top to bottom.
Figure B.1. The potential labor force participation rate
This is a line chart showing quarterly estimates of the potential labor force participation rate (LFPR) as a percentage from 1960 to 2026. The y-axis shows percentages ranging from 58 to 67 percent, while the x-axis displays years in decade intervals. A single black line labeled "Potential LFPR" represents the data series. The potential LFPR starts at about 59 percent in 1960 and remains relatively stable until the late 1960s, when it begins a steady upward rise. The rate increases consistently through the 1970s, 1980s, and the first half of the1990s, reaching a peak of nearly 67 percent in 2000. After 2000, the potential LFPR begins to decline, with this decline slowing in the late 2010s, such that potential LFPR hovered around 62.5 percent from 2022-2025.
Note: The potential LFPR shown here is from CBO (2026).