So far, we have seen unemployment fall sharply without generating sustained inflationary pressures. If the decline in the labour force participation rate is permanent, then, as GDP rises, there will be greater pressure on wages and prices – with falling participation the labour market tightens more quickly.
Other longer term factors, like less immigration and the on-going re-pricing of labour costs in China, will also tend to give impetus to global and US inflation. It is also possible however that substantial slack remains in the US labour market.