Count it among the oddities of the Obama economy that the unemployment rate could drop by three-tenths of a percentage point and be met with grimaces across the board. But that's what happened last week, as the Bureau of Labor Statistics announced that the number of Americans looking for work but unable to find it in December fell to 6.7 percent, its lowest point since the Bush administration.
Fewer unemployed Americans are generally a good thing, so why all the long faces? Despite a large and unexpected drop in the official jobless rate, the economy in December created just 74,000 new positions. In a country of more than 310 million people, 74,000 is nowhere near enough to make a dent in the nation's jobless epidemic. Meanwhile, the labor force participation rate – that is, the number of Americans either employed or actively trying to find employment – is now lower than it has been since 1978. As FiveThirtyEight's Ben Casselman reported Friday, December was the 44th month in a row during which "more unemployed workers gave up looking than found jobs."
In other words, the unemployment rate didn't go down because the economy is putting people back to work; the unemployment rate went down because the economy is failing so miserably to put people back to work that hundreds of thousands of Americans have quit trying altogether. But by exiting the labor force, they are creating the impression that the problem with unemployment is less serious than it actually is.
Five years and $7 trillion in debt after President Obama first took office, the unemployment rate has finally managed to claw its way below 7 percent. To understand just how big an accomplishment this isn't, glance at the chart offered up by his economic advisers back in January 2009. According to them, unemployment should be around 5 percent today, well below its actual position. One can only hope their intention was to get there by bringing people into the labor force, not driving them out.