SINCE 2015 many hawks have continually suggested that the American economy is at or close to maximum sustainable employment. They have some explaining to do. Fully 5.8m more Americans are in work than in December of that year, when the Federal Reserve began raising interest rates. That is two-thirds as many as lost their jobs during the Great Recession. In May the unemployment rate fell to 3.8%, its lowest for 18 years (it has since risen back to 4%). Yet the economy has not yet overheated. Only recently has inflation hit or exceeded 2%, the Fed’s target, for three straight months—and that is partly because of a worldwide recovery in oil prices.
Nevertheless, the hand-wringing has continued. The latest supposed problem is a labour shortage. For the first time since data began to be collected in 2000, there are more job openings than there are unemployed workers (see chart). Nearly 90% of small businesses who are hiring or trying to hire workers report that there are few or no qualified applicants,...Continue reading
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