Unemployment Drops, But Not Because of a Growing Job Market

The president will soon be crowing because unemployment dropped from 9.0% to 8.6%. But is it a sign that the job market is finally turning around? No:

@ezraklein: Bad news deep in the jobs report: most sectors down. The boost came from retail sales, so it might just be temp.holiday hiring

Probably true. Just as the census workers temporarily helped the unemployment rate, the temp holiday workers will make things look better than they are...temporarily.

In fact, we have more than 300,000 people who have withdrawn from the work force and stopped looking and therefore are no longer counted in the numbers. The real unemployment rate is probably still well north of 13%.

Jim Geraghty explains how a declining job force affects the unemployment rate in a video he prepared in February of 2010: