I hate to be the bearer of bad news, but the jobless rate that fell to 8.6% in November was really not a sign of a recovering economy. You have to look behind the rate to see the real numbers.
Here's what Jeff Cox, Senior Writer at CNBC, wrote:
Job creation remained weak in the U.S. during November, with just 120,000 new positions created, though the unemployment rate slid to 8.6 percent, a government report showed Friday.
The rate fell from the previous month’s 9.0 percent, a move which in part reflected a drop in those looking for jobs. The participation rate dropped to 64 percent, from 64.2 percent in October.
The actual employment level increased by 278,000. The total amount of those without a job fell to 13.3 million.
The measure some refer to as the “real” unemployment rate, which counts discouraged workers, also took a steep fall to 15.6 percent from 16.2 percent, its lowest level since March 2009.
Average earnings were essentially flat, up two cents to $23.18 an hour. Private payrolls increased 140,000, considerably less than a report earlier this week showing that nongovernment jobs were up by more than 200,000 for the month.
Government payrolls fell 20,000, including a 4,000 drop in federal positions.
As expected, the service sector was responsible for the bulk of job creation, adding 126,000 jobs against just 2,000 for manufacturing.
Long-term unemployment remains a big problem: The average duration for joblessness surged to a record-high 40.9 weeks. Stagnation in wages also continues, as more employed workers took on second jobs. There were just under 7 million multiple job-holders for the month, the highest total in 2011 and the most since May 2010.
So the drop in the unemployment rate is largely attributable to the fact that some 310,000 people simply stopped looking for work and therefore are no longer counted as unemployment. The Labor Force participation rate fell from 64.2% to 64.0%, if that figure were at the same level it was at the time President Obama took office, the current rate would be at 11%.
So the people who have stopped looking for a job are actually helping President Obama, who presided over the worst economy in 80 years, keep his job.
But the White House should not celebrate too much. Many of the jobs are seasonal. We coud be back at 9% by February if there isn't real change.
