Jobless Figures: Good, Bad, or Indifferent?

Good, I'd say.  Sort of.  In a very weak way.

The unemployment rate dropped 20 basis points, from 9.6% to 9.4%.  That's great news.  Except that labor force participation also dropped 20 basis points, which is what's propping up those figures.  People basically gave up looking for work, and therefore aren't counted as unemployed.

Still, it is good news, of a sort.  Job loss is slowing, and a 12% eventual unemployment peal seems less likely than it did even a few months ago.

But we should keep in mind that this also reinforces a grim fact of modern unemployment--it's getting longer and harder than it used to be.  Prior to the 1990s, unemployment was mostly cyclical:  firms laid off workers because demand was low, then signed them back on again.  Now shifts are structural--industries are downsizing, jobs are being automated out of existence.  We're seeing huge numbers of people become marginally attached to the workforce, or leave entirely; long-term unemployment is spiking; and the number of people being forced into part time work is also very high.  This weak's job report is hopeful only in comparison to the real fears that we were looking at a second Great Depression.

Update:  (11/30/10) It's been pointed out to me that the June rate was 9.5%, not 9.6%.  Where'd I get 9.6%?  No idea, as it was over a year ago.  Mea culpa.  Also corrected--dumb typo on basis points.  Thanks to commenter Downpuppy for pointing it out.