Check out the following commentary by Economics Finance blog contributor Tyler Stoffers.
On Friday February 4th the U.S. Bureau of Labor Statistics reported that unemployment had fallen to 9% in January from the original 9.4 percent. This .4% reduction may seem like a small adjustment, but if you factor in the size of the United States work force (roughly 160 million) this decrease represents around 600,000 people. However, during this same period it was reported that there were only about 36,000 new jobs created. You might then ask, what happened to the 570,000 other people? One possibility is that many of these workers have become discouraged and decided to stop actively looking for a job. Another rational is that some workers have decided to either retire or raise a family and become Housewives (or Housemen). In either of these cases, these workers would have left the labor market and thus could help explain the missing 570,000 people. All in all although this news might have initially indicated a very positive response from readers, one needs to keep in mind that it is not just the unemployment rate that represents how the job market is performing but the rate of job creation as well. Vincent Reinhart summed it up best when he said “An employment report like this is a Rorschach test” and readers should beware when making assumptions on the labor market. What is your view of the job market? Do you believe we are making improvements or falling backwards?