December 2010 Unemployment Report: A Big "Meh"

December's unemployment rate was released this morning by the Bureau of Labor Statistics. U-3 unemployment dropped from 9.8% last month to 9.4% this month. The U-6 number dropped from 17% to 16.7%. Only 103,000 jobs were added, however, which indicates that the drop in unemployment was more due to people leaving the labor force than getting jobs. [This job number is based on a survey of industry, rather than actual payrolls, like ADP's job number (+297K). The truth this month is likely to lie somewhere between those two numbers.]

Here's the updated version of The Chart, always available in t-shirt form (and a variety of other products) from S. Weasel (all proceeds go to support her indolent expat lifestyle):*

The Good:

• The number of unemployed people dropped by 556K, though a lot of those people left the labor force and may come back.


• The number of those employed part-time for economic reasons dropped a bit over the last couple of months. Previously the U-3 unemployment rate had been artificially suppressed by increasing numbers of part-timers.


• Manufacturing added 10K jobs, rather than losing jobs again


• Government shrank by 10K jobs, but that actually meant that local governments dropped 20K jobs and the federal government added 10K jobs. Thanks, Mr. President!

The Bad:

• The labor participation rate has dropped to its lowest percentage since 1983, falling from 64.5% last month to 64.3% this month. That likely indicates a large pent-up labor supply that is not included in the U-6 unemployment numbers.


• The number of long-term unemployed is at its highest value ever, increasing from 6.33 million to 6.44 million.

Summary. B- report with weak job growth and continued hemorrhaging of the labor force.

*The BLS changed the rates for the past year today as part of its annual tweaking of its seasonal adjustments, but since it only changed 3 of the months by 0.1%, I'm not going back and nudging the old dots into their new spots.

posted by Geoff at 10:42 AM

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