The head of the Federal Reserve Bank of New York says the U.S. economy is not out of the woods yet.

New York Fed President William Dudley, who also serves as Vice Chairman of the Federal Open Market Committee, said despite some economic improvements, there are warnings the recovery could easily fall off.

Dudley said data on the U.S. economy has been a bit more upbeat of late and these developments are encouraging. But he added it is far too early to conclude that the U.S. is out of the woods in terms of generating a strong, sustainable recovery.

The New York Fed president said the recent drop in the nation's unemployment rate was due to a declining labor force participation rate. He said that the unemployment rate would still be over ten percent if the labor participation rate had not dropped.

The U.S.’s unemployment rate stands at eight-point-three percent, the lowest in three years.