Unemployment Rate Down to 9.7%

The Department of Labor announced today that the unemployment rate is now at 9.7%, down from 10% last month.  But that drop is deceptive as there was a 20,000 job loss in January (and December's losses were adjusted download by a significant amount).  So what's going on?  Probably more people dropping out of the job market (the 16.5% underemployment rate is a related phenomenon), making the overall job situation look better than it is.  This will have another counter-intuitive effect once hiring begins in earnest.  Initially, the unemployment rate will likely increase for a while as people who dropped out starting looking for work again.  Yet another reminder that one number--especially the unemployment rate--only tells part of the story.

-JH