Harvard economist Kenneth Rogoff, known for his extensive research into financial crises, says the US labor market is closer to capacity than many people think.

Rogoff told CNBC at the Ambrosetti workshop in Italy that he is bullish on the U.S. economy despite weak wage growth and below-target inflation. He thinks recent economic data indicates that, while the jobs market isn’t “super-healthy”, it is fast improving.

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“It’s tighter than you think and (Federal Reserve Chair Janet Yellen) admitted that in her Jackson Hole speech,” he said.

Rogoff thinks the U.S. labor force participation rate will soon be back up to 64 to 65 percent. Last November it hit a three-decade low of 62.8 percent. But he doesn’t think the Fed will be quick to raise rates even if inflation picks up. “If inflation goes above target, (the Federal Reserve is) going to say they care but they really don’t care,” he said. “The big game here is not to have another double dip, not to cause problems.”