A record-long bout of hiring has driven the U.S. unemployment rate down to 3.8 percent, the lowest level since April 2000. So how much lower can it go? Judging from the latest jobs data, it might finally be nearing the limit.
Great as it would be if everyone who wanted a job had one, the economy needs a little unemployment. If the demand for workers outstrips supply by too much, it can start an inflationary spiral in which wages and prices drive each other higher. Economists at the Federal Reserve think that in the longer run, the "natural" unemployment rate should be somewhere between 4.2 percent and 4.8 percent.