Reply #4: No

[ProSense]

"The reason the unemployment numbers went down is because the number of discouraged workers..."

Discouraged workers contributed to half the drop. The other half (.2 percent) is attributed to job creation.

EPI:

The December jobs report shows continued improvements in the labor market, but they were modest. Payroll employment growth was just 103,000, average hours held steady at 34.3, and average hourly wages increased by only three cents. Though the unemployment rate dropped to 9.4%, around half of the improvement was due to 260,000 people dropping out of the labor force, leaving the labor force participation rate at 64.3%, a stunning new low for the recession. Incredibly, the U.S. labor force is now smaller than it was before the recession started, though it should have grown by over 4 million workers to keep up with working-age population growth over this period.

The good news in this report is that December caps an entire year of job gains in the private sector. The bad news is that – three full years after the recession officially began – the U.S. is still near the bottom of a deep crater. Where does the Great Recession, three years out, stack up historically? The accompanying figure, which compares the percent employment change by month from the start of each post-WWII recession, shows that the Great Recession is far outside the experience of any this country has seen in 70 years. Three years out, the labor market is still down a larger percentage of jobs (5.2%) than at the most severe point of any other postwar recession.

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While the labor market is now adding jobs, it remains 7.2 million payroll jobs below where it was at the start of the recession three years ago. And even this number understates the size of the gap in the labor market by failing to take into account the fact that simply keeping up with the growth in the working-age population would require the addition of another 3.7 million jobs in those three years. This means the labor market is now nearly 11 million jobs below the level needed to restore the pre-recession unemployment rate (5.0% in December 2007). So, despite the job growth of 2010, we remain near the bottom of a very large hole. To achieve the pre-recession unemployment rate in five years, the labor market would have to add nearly 300,000 jobs every month for the entire period. December’s modest improvement offered 103,000 pieces of good news, but little collective cheer.

The rate dropped, it didn't go up, and jobs were created, although short of expectations.

The reaction to this report should be viewed in context of a report that could have continued the November 2010 path (a decline in the number of jobs created and an increase in the unemployment rate). Instead it's continuning to move in a noticeable positive direction, especially with the October and November being revised up.