Originally published in The New York Times
The August jobs numbers suggest an economy that is starting to strain at its capacity, as the labor force shrank and wages rose.
By Neil Irwin
The headlines for the August job numbers released this morning are nothing but good. Employers added a robust 201,000 jobs, the unemployment rate remained at the rock-bottom level of 3.9 percent, and wages grew the fastest they have in nine years.
There’s no doubt that this is the best economy in quite a long time for American workers, who by a wide range of measures can find a job more easily than they have in a decade.
But when you pull apart the details, you also find hints that this is an economy running awfully close to its capacity. If that’s the case — and one month’s worth of numbers isn’t enough to make the case definitively — it implies we should expect both slower growth and steeper Federal Reserve interest rate increases in the next couple of years.
