Economists have conjectured that this is caused by improved technologies that allow businesses to monitor their demand more closely and manage their inventories better. Recent developments ought to give us more evidence on this subject.
In fact, judging how much slack there is in the labor market is one of the most important questions that my Federal Reserve colleagues and I consider when making monetary policy decisions, because our inflation goal is no less important than the goal of maximum employment. This is not just an academic debate.