The answers are no and no. Even when the official unemployment rate is 4.1%, we are not close to real full employment. And it does not appear that inflation is about to surge. If the authorities are really worried about it, they should develop counter-measures that do not cause more unemployment.
How these issues have been handled over the last fifty years is instructive. In 1969, after a 1964 tax cut, and hefty spending increases for the Vietnam war and for social programs, prices were rising 5.5% a year. The official rate of unemployment was down to 3.5% and that lifted millions of people out of poverty. But there were millions more who were still unemployed or underemployed. Some of them people rioted in America’s cities. A special Department of Labor survey of ten inner-city communities revealed levels of unemployment that were much higher than those in the regular unemployment census.
In the late 60s and the 1970s, anti-inflation concerns often replaced anti-poverty and employment concerns. Reducing demand for goods and workers was used to limit wage and price increases. A short recession in 1969-1971 raised unemployment a bit but did not moderate inflation much. Then world demand pushed food prices up and oil prices surged. The latter was a long-term and major cause of higher inflation, but over time it seemed that wages got more blame than oil prices.
In 1971-1974 President Richard Nixon tried wage-and-price controls–an…