2017 jobs picture was rosy, but are we at full employment?

2017 was a good year for jobs. Over the past year, (November 2016 to November 2017, the latest figure available), unemployment’s fallen by half a percent to just 4.1 percent. And according to orthodox economics, that means we’re hovering around full employment. Basically, the model says: If unemployment falls lower, employers will be so desperate for workers they’ll have to aggressively raise wages and then raise prices to pay for those higher wages. Which in turn would lead to a rapid rise in inflation. But so far, even with low unemployment, wage increases have been moderate. Average hourly earnings increased 2.5 percent in the past year. That’s not much faster than consumer prices. So inflation? It’s a possible risk, some economists say, and something that the new Federal Reserve chairman, Jerome Powell, will be charged with keeping an eye on in 2018. 

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