Time to Put the Brakes on Jobs?

Should the Fed continue raising interest rates?

After several rate increases and with unemployment at a 17-year low, Fed officials face the question of whether joblessness might fall so much that they should pick up the pace of tightening to prevent the economy from overheating. The latest employment report released Friday by the Labor Department doesn’t suggest they need to move more aggressively or slow down. Employers added 148,000 jobs in December, and the unemployment rate was unchanged at 4.1%. Average hourly earnings of private-sector workers rose 2.5% from a year ago, in line with recent monthly readings.

Goodness. We wouldn’t want joblessness to fall too low, would we? That might force employers to pay people more!

If the Fed wants to raise rates because they think they need to keep their powder dry for the next recession, I can buy that. Maybe. But the only reason to worry about unemployment getting too low is a fear that it will push up inflation. And there’s precisely no reason to fear that inflation is about to pick up. Someday there might be, but that day is not today, not anytime in the past two decades, and unlikely to be anytime in the next few years either: