Reporter

(Karen Bleier/AFP/Getty Images)

If I told you that workers weren't getting bigger raises despite the fact that the economy had added 150,000 to 200,000 jobs last month, you wouldn't be able to tell if I was talking about 2011 or 2018, or any time in between.

That, after all, is the same story we've been hearing during pretty much the entire recovery. Not even 4 percent unemployment has been enough to change it. The only thing that might is President Trump's incipient trade war.

Before we get to that, though, here's the good news. The economy added, yes, 213,000 jobs in June, and 37,000 more than we had previously thought in the months before to bring our three-month average up to a very healthy 211,000. Indeed, that's more than a fast enough pace to keep pushing the unemployment rate down to what might soon be its lowest level since the 1960s. Now, that said, it is true that joblessness actually ticked up 0.2 percentage points last month, but even that was a case where it's more appropriate to say the silver lining had a slightly discolored cloud attached to it than the other way around. In other words, it happened for the good reason that so many more people were looking for work, many of whom seemed to be long-term unemployed people starting their job searches anew.

This would be the best possible ending to the story of our recovery. That's because it would mean that it would eventually reach everybody. Right now, you see, the economy seems to be in the Goldilocks zone, where it's growing fast enough to bring unemployment down, but not fast enough to push inflation up. That is just another way of saying that it's not only creating jobs for new workers but also for old ones who had given up looking for a job — and, in the process of bringing them off the sidelines, keeping a lid on wages. That makes the Federal Reserve's job as easy as could be. It can afford to raise rates at a leisurely pace that doesn't threaten to cut off the recovery, because the recovery is proceeding at a leisurely pace that doesn't threaten to overheat.

It's hard to say how long this can go on, but we know it can for at least a while more. Wages aren't really growing any faster than they were two years ago, when unemployment was a full percentage point higher than it is today, which tells us that there must still be a decent amount of slack left in the jobs market. Despite our 4 percent unemployment rate, that actually makes sense when you consider that the share of 25-to-54-year-olds who should be in the prime of their working years and are in fact doing so still hasn't gotten back to where it was before the recession — and is well below countries like Germany and Japan. Heck, even France, whose generous welfare state supposedly keeps its people from working, does better than us by that measure. There's no reason, then, that our little recovery that could can't keep chugging on and on and on.

Unless, of course, Trump's trade war interferes. The Fed has reported that businesses have "scaled back or postponed" big investments because of the "uncertainty over trade policy," and that's only getting to get worse now that tariffs are actually here. The problem for the Fed — and, by extension, all of us — is that interest rates aren't a great way to blunt the effects of a trade war. It's not like lower rates would make tariffs go away, or make it so companies still have an incentive to build their factories here. What would happen, though, is that rounds of tariffs and retaliatory tariffs would send prices and unemployment up at the same time, creating something of a conundrum for the Fed. Which one would it be more worried about? Well, that would probably depend on how bad inflation got compared with unemployment. But in the meantime, the Fed would probably keep interest rates on pretty much the same path they were before, and accept that there are some things it can't change — like the whims of our president.

And that's the biggest difference between the economy in, say, 2016 and 2018. We used to worry that the Fed would send the recovery to a premature end by doing something it shouldn't. Now we worry that about the president.