According to a new report from The Wall Street Journal, as the U.S. unemployment rate continues to drop full employment may end up contributing to a new surge in inflation.

The Details: In December the official US unemployment rate ticked down to 3.9 percent, beating analysts estimates. Full employment is usually considered to be achieved at 4 percent unemployment.

In addition to adding 199,000 jobs in December, wages also increased by 4.7 percent in December.


The rise in wages is believed by many economists to be a key driver of inflation, a situation that is made worse as an economy meets and then exceeds full employment.

Economists have predicted that wages will continue to rise, with The American Bankers Association predicting that wages will rise between 4.5 and 5 percent this year.

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