Chart of the Day - How the Labor Market Changed

It appears the enthusiasm over this morning’s labor report has ebbed a bit as more people look at the detailed data behind the headlines. Of course the big news was that the jobless rate fell from 7.9 percent to 7.7 percent, but, this is far less impressive when considering that, while 300,000 people were no longer counted as unemployed, some 296,000 people dropped out of the labor force.

Here’s another way to look at the data - while the household survey indicated 170,000 more Americans had jobs last month, an even larger number - some 190,000 people - currently don’t have a job, want one, but haven’t looked for one lately and, as a result, are no longer counted as “unemployed”.

Of course, if/when people become convinced that the economy is getting better, more people will actively look for work which, ironically, will make the unemployment rate go up, all else being equal.