Unemployment Rate for January 2010 at 9.7% (Updated)

The Bureau of Labor Statistics has released its monthly estimate of the employment situation:

The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs.

That sounds like good news. It would be even better if we were seeing job growth. We aren’t:

In January, the civilian labor force participation rate was little changed at 64.7 percent. The employment-population ratio rose from 58.2 to 58.4 percent.

and the number of discouraged workers continues to grow:

About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Among the marginally attached, there were 1.1 million discouraged workers in January, up from 734,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million people marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

This is very bad news. It means that the decline in the unemployment rate, as in past months, is almost entirely because potential workers have become so discouraged they’ve stopped looking and, due to the way the unemployment rate is calculated, no longer count.

However, in real human terms and in terms of economic well-being they count very much indeed and, if this pattern continues, I expect we’ll see anxiety increasing rather than diminishing.

Update

I think I may have misread the results. This table shows a sharp decrease in U-6. If that’s the case it’s very good news indeed.

Update 2

Curiouser and curiouser. The non-seasonally-adjusted figure shows a sharp increase in U-6. I guess it depends on how much confidence you have in the fudging. And it looks like that’s the way the markets are taking it, too.