Right - the official unemployment level dropped from 8.2 to 8.1%. But only 115,000 jobs were created (economy needs to creat 200-250,000 jobs monthly just to stay even), while over half a million people dropped out of the workforce in just the last month - they stopped looking for a job and hence weren't counted as unemployed. Had they stayed in the workforce, the reported unemployment rate would have been 8.4%.
Check out this chart - People Not In Labor Force Soar By 522,000, Labor Force Participation Rate Lowest Since 1981 . Or this article - Real U-3 Unemployment Rate: 11.6%
Oil prices are falling - but only because of the perceived slowing of economic activity Oil in Free Fall as Economic Worries Spur Selling - which also explains the Dow stock index dropping 168 points yesterday.
Here's a nice summary -
So what is the true state of the labor market?
1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.6% today—the U-3 unemployment rate would be 11.1%.
Now, this doesn’t take into account the aging of the Baby Boomers, which should lower the participation due to rising retirements. But is that still a valid assumption given the drop in wealth since 2006?
2. If you take into account the aging of the Baby Boomers, the participation rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the participation rate would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.7%.
3. Of course, the participation rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.3%.
4. If the participation rate just stayed where it was last month, the unemployment rate would have risen to 8.4%.
5. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.5%.
6. The employment-population ratio dipped to 58.4% vs. 61% in December 2008. An historically and alarmingly low level of the U.S. population is actually working.