(Lynne Sladky/AP)

This is the kind of economy that central bankers dream about.

No, really, they had to dream about it. That’s because, other than the late 1990s, we’ve never seen the confluence of so much positive economic news like we are now. Unemployment, after all, has just fallen to an almost-50-year low of 3.7 percent, and wages are still rising at a more respectable rate of 2.8 percent — but despite all that, prices have only gone up a restrained 2.3 percent the past year.

And there’s no sign the economy is going to wake up from this dream anytime soon. While it’s true that we only added 134,000 jobs in September, everything else says that the underlying trend is just as strong as ever. Indeed, big upward revisions to July’s and August’s numbers mean that, on average, we’ve added the same 190,000 jobs a month in the past three months that we have for most of the past eight years.

It’s the perfect amount of growth for this point of the business cycle: not so slow that unemployment stops falling but not so fast that inflation starts rising. The Federal Reserve can afford to continue raising rates at a leisurely pace, safe in the knowledge that even letting unemployment fall to historically low levels only seems to lead to marginally higher inflation, if that. Which is to say that what made the recovery so frustrating before — how slow and steady it was — is what’s making it so durable now.

In fact, the economy is doing so well that it would almost seem “too good to be true,” Federal Reserve Board Chair Jerome H. Powell said, if we were able to keep this up for a few more years, as the central bank is now forecasting. One reason we might is that the Fed has done such a good job of getting people to expect inflation to remain low that there isn’t as much of a trade-off between inflation and unemployment as there used to be. But just as important is this: Despite all of these sparkling economic statistics, the labor market, by a few measures, remains a little duller than it was before the recession. So the recovery still has a little way to go.


(Source: U.S. Census Bureau)

Maybe the most obvious shortcoming is that there still aren’t as many people looking for work as there “should” be. In particular, the share of 25- to 54-year-olds — who you’d think would be in the prime of their careers and are in fact working — is still 0.4 percentage points below where it was in 2007, which itself was 1.6 percentage points below where it was in 2001. These are millions of missing workers who, considering that this number hasn’t improved at all in the past eight months, we’re still pretty far from finding.

But much more surprising is that even though there are more job openings than unemployed people for the first time on record, the labor market doesn’t seem to be working as well as it used to. How so? As you can see above, the odds that someone who lost their job six months ago, when the unemployment rate was a mere 4.1 percent, still wouldn’t have one today is 9.9 percent. That’s a full percentage point worse than it was from the middle of 2006 to the middle of 2007 — the high point of the housing boom — when joblessness had been between 4.4 percent and 4.7 percent. And it’s almost twice as bad as it was the late 1990s, despite the fact that unemployment was pretty much the same then as it is now.

It’s not entirely clear why, but it seems safe to say that the Great Recession is still casting enough of a shadow over the labor market that 4 percent unemployment isn’t quite what it used to be. Maybe 3.5 percent unemployment would do the trick. Maybe we should try to find out.

Because one thing is for sure: A central banker’s dream might be close, but it still isn’t a worker’s dream.