Unemployment Rate Above 8% For 36th Consecutive Month, Labor Participation Rate Falls To 30 Year Low

There was a small reduction in the unemployment rate today, from 8.5% in December to 8.3% in January, and the media is championing the fact that this is the fifth month in which there’s been a decline.

The U.S. job market strengthened at the start of the year as employers added an unexpectedly large number of new jobs and the unemployment rate in January dropped for the fifth straight month to 8.3%–the lowest in nearly three years.

The Labor Department said Friday that employers nationwide added 243,000 net new jobs in January – about 100,000 more than what analysts were forecasting. Job gains were broad-based, powered by increases in manufacturing, professional and business services such as accounting and engineering, and in leisure and healthcare industries.

Superficially this all sounds very nice, but a closer look at the numbers shows us that this is statistical static. The real economic picture isn’t improving.

The economy may have added 243,000 new jobs, but some 1.2 million workers dropped out of the labor force (meaning they were no longer counted against the unemployment rate). According to Zero Hedge, that’s an unprecedented and record-setting one-month number for labor force shrinkage.

The labor participation rate is now at a 30-year low of 63.7% (click for a larger view):

The economy isn’t improving. The only reason the unemployment rate is going down is because people are giving up looking for jobs.

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Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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