Real reason for unemployment drop – people quit looking

January 9, 2012 10:31

“[T]he reality is that the economy is currently struggling along at a very anemic pace. Without employment growing fast enough to offset the labor pool overhang, we are unlikely to reduce the real unemployment problem that persists in the U.S.” –


by Lance Roberts on Friday, 06 January 2012 at

On the positive side there were 200,000 jobs created in the previous month and the unemployment rate fell from an upwardly revised 8.7% to 8.5%.  Furthermore, while October was revised higher by 12,000 jobs; November was revised lower by 20,000.  Now it is time to dig behind the headlines.


If you take a look at the actual number of those “counted”as employed that number has risen from the recessionary trough.  However, in reality, employment is still far below the long term historical trend.  Currently, the deviation from the long term trend is the widest on record and has made very little improvement.

How can this be if the unemployment rate is falling?

To answer that question we only need to look at the number of individuals that have “fallen off” the rolls entirely due to long term unemployment. …  This weakness is further confirmed by the duration of those out of work which remains near last month’s record at 40.8 weeks.



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