America is teetering on the edge of an inflationary event horizon. Like an inflamed appendix, the jobs market is bursting at the seams. Bosses and the government must fix the problem before it goes boom. Workers, irked by microscopic raises and plummeting living standards, will demand higher wages. Unless companies accept lower profits, a wage-price spiral will burrow itself into the economy. And ripping it out will be excruciating.
In a tragic irony, the labour market is strong, too strong. The unemployment rate was lower last month than economists and pundits expected. Just 3.5% of Americans looking for a job didn't have one. Businesses also created 263,000 new jobs, 5% more than forecast. More jobs and low unemployment are usually desirable, but not when inflation is high and rising. Mixing these two ingredients is a recipe for much tighter economic conditions and higher interest rates.
The Federal Reserve, America's central bank, wants to get inflation down but can only do it by for…