Don't Be Fooled By Lower Unemployment Rate, Job Losses Continue to Mount

The U.S. economy shed 20,000 jobs in January, a tad worse than expectations for a reading of flat to up 15,000. The unemployment rate unexpectedly fell to 9.7%, a five-month low.

A falling unemployment rate is certainly good news for the Obama administration, and temporary hiring, which typically leads to permanent hiring, was up by 52,000. In addition, the average hourly workweek rose to its highest level since February 2009 and average hourly earnings were up as well.

Another positive sign: The labor force grew by 111,000 last month and the so-called real employment rate fell to 16.5% from 17.3%.

But it's a mistake to view the report as unabashedly "good" news.

Beneath the headlines, the government reported the U.S. economy has lost 8.4 million jobs since the recession officially began in December 2007, a sharp upward revision from 7.2 million previously reported; that includes 930,000 jobs more than previously estimated in the 12 months ended March 2009.

In addition, the ranks of the long-term unemployed swelled to over 6 million and the number of "discouraged" job seekers rose to 1.1 million vs. 734,000 a year ago. More >>