3.6 %. The lowest U.S. Unemployment Rate since 1969.

That rate is not only stunningly low, it's disturbingly low.

Traditionally economist have regarded 7% as "full employment".  If we keep in mind that at any one time there's a certain percentage of the available workforce that's idled by choice, that makes sense. That's not throwing stones at anyone, its just that some folks choose not to work. That's different from being unemployed.

Now, some will tell you that some of those people have given up looking for work, but anyway you look at it, the current unemployment rate is bizarrely low.

3.6% is so low, it's actually problematic, or it could be.

Usually when unemployment reaches this sort of unemployment rate, bad things begin to happen.  For one thing, it's usually a sign of a "super heated" economy, and very soon prices and wages begin to rise and inflation sets in. 

Indeed, that is what happened the last time the rate was this low. That was in 1969 and the reason it was that low is that the Vietnam War was at its height.  We had 500,000 men in Vietnam, a huge military deployment elsewhere around the globe, and a massive amount of military and social expenditure going on. At first, the government actually welcomed inflation, as it reduced the value of the loans it had to pay back to afford all of that, but by the early 1970s it was totally out of control.  It took Ronald Reagan coming into office and intentionally throwing the country into a severe recession to fix the economy, and we've lived with that fixed economy since then.

This could wreck it.

Indeed, if we look at other historical low unemployment rates its disturbing.  3.2% was the unemployment rate in 1929. . . and we know what happened to that super heated economy.  During World War Two the unemployment rate was below 2%, but that was due to our being in the largest war of the 20th Century and the government was forced to put in wage controls to handle the resulting labor shortage.  It wasn't even possible to leave some critical defense work if you occupied such a job.  The Korean War dropped the unemployment rate down that low once again.

The oddity now is that there's  no wars going on. . . or at least nothing like the Korean and Vietnam Wars, and so far inflation hasn't really gotten ramped up.  Indeed, while its debated, some claim that the American middle class remains in wage stagnation, although there's pretty good evidence that's not true.  So, so far, so good.

But also, this can't keep going in this direction. 

Assuming that it's not a statistical glitch, and that it doesn't straighten itself out on its own rapidly, this will be inflationary at some point absent external forces.

Of course, those external forces may be at work right now.  It could be automation that's keeping inflation from getting rolling. As labor shortages develop, some of those shortages might be getting filled by machines, which might in turn keep the inflationary drive of wage hikes from occurring.  That would be good in the short term but when this trend reverses, and it will, it won't be. The robots will keep their jobs. . . or just be unplugged until they're needed again.

An external force that would seem to be available would be job exportation, always a hot topic. That may still be going on as well, in the form of globalization.  If it is, what's surprising here is that there' hasn't been an effort to translate that into a similar economic regime south of the Rio Grande.

Or maybe it is.  Mexico's unemployment rate right now is 3.2%, even lower than the American one.  That's up from a nearly incredible 2.9% the prior year.  The Canadian unemployment rate, in comparison, is a more normal but still really good 5.8%.  Anyhow, the combined Mexican and American rates go a long ways towards explaining why Central Americans are hitting the road and going north.  Would that the Central American governments were more stable, perhaps this would translate into a rise for them as well.

Interesting economic times at any rate.

Particularly as current American politics have gotten so odd that a really low unemployment rate doesn't seem to translate into the normal political conversation.  From national politics, you'd think we were in a fairly severe recession, but we're not.