Right now the U.S. economy is near full employment and operating at full capacity. The unemployment rate is low, and set to decline further as job growth continues to outpace labor force gains. Wages are rising, and inflation is picking up after five years of running below target. It is clear the business cycle has not yet waned. However, it is important to keep in mind that when economists talk about GDP being at potential – our office included – it really is a beaten down potential, or one of lower expectations today than a few years ago.