The United States economy ended the year by adding 103,000 jobs in December, the Labor Department said Friday, a number that missed expectations.
In addition, the unemployment rate fell to 9.4 percent last month from 9.8 percent, its lowest rate since July 2009, in part because many American gave up looking for work.
The labor market typically needs at least 300,000 to make a difference in the unemployment rate, economists say. Anything less than that is just barely enough to keep pace with population growth.
Professor Jacobson breaks it out a bit further (check the link for the charts!):
Dig just a bit deeper, and you will see that 0.2% of that drop (or half the total drop) was from a decrease in the "participation rate" from 64.5 to 64.3 of the population. So half of the good news reflects that people have dropped out of the work force and have given up looking for work.
The other disheartening statistic is reflected in the chart combining the unemployment, marginal and discouraged workers (in short, everyone who is not working but currently or at one time wanted to work, or who is employed part time because full time work was unavailable). Combine all those and the total is 16.6% up from 16.3% November not seasonally adjusted (seasonally adjusted it is 16.7% down from 17%). This is the highest number since 1994 (first year data available)...
Tyler Durden sees it differently, but no more optimistically:
While today's unemployment number came at a low 9.4%, well below expectations, the one and only reason for this is that the labor force in America has plunged to a fresh 25 year low. Assuming a reversion to the mean in the long-term average participation rate back to 66%, means that the civilian labor force, which in December came at 153,690, a drop of 260,000 from November, is in reality 157.6 million, a delta of 3.91 million currently unaccounted for. Maybe someone can ask Bernanke during his imminent presentation before Congress what happened to the unemployed population, which would have been 18.4 million if this labor force delta was incorporated, resulting in an unemployment rate of 11.7%
Counting on our ignorance, Barack Obama and the media will trumpet the fact that millions of Americans are permanently unemployed as good news, and simply point to the drop in the rate as an indicator of success even us simpletons should understand.
But we know better, those of us who see our friends, family, and neighbors with the look of quiet desperation in their eyes, as their clothes get worn out and they pound the "For Sale" signs into their lawns forlornly, looking for the elusive buyer while keeping the brave face up for their children....