The U.S. labor market looks to be in a precarious balance, in solid shape for the moment but vulnerable to a rapid worsening.

The big picture: That's the implication of the chart above, which captures the relationship between the rate of job openings and unemployment. Based on this historical experience, if employers were to pull back on the number of job postings even slightly, it would coincide with a rapid rise in the jobless rate. • It helps explain why the Federal Reserve is cutting interest rates even as inflation is elevated and financial markets are booming.

State of play: The relationship between vacancies and unemployment is known as the Beveridge Curve, developed by British economist William Beveridge in the 1940s. • In 21st century America, the Beveridge Curve has display

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