Furthermore, not only did the number of discouraged workers over job prospects hit a record high (since 1994, the earliest year the data is available) of just over 1.3 million (Fig. 1)--more than the number of jobs added in 2010--but the labor participation rate also hit at a 25-year low of 64.3% (Fig. 2).
Most disturbingly, the average number of weeks people remain unemployed also has risen to 34.2 weeks in December vs. 33.9 weeks in November, with 6.4 million jobless people classified as long-term unemployed, i.e. without a job for 27+ weeks.
All these suggest there is a large number of frustrated workers who left the labor pool but unaccounted for in the unemployment rate calculation. That means the all inclusive jobless rate could easily be 11% or more instead of the 9.4% flashing in headlines today.
Overall, the latest employment report seems to reflect a painfully slow-recovering, but still confused labor market. Large corporations are hoarding cash reluctant to hire or invest fearing uncertainties ahead, while small business still strapped for cash and credit can’t afford to hire since business is still slow.
Most economists estimate that in order to make a meaningful dent in the jobless situation while keeping up with the labor force growth rate, new job creation needs to be at around 300,000 a month going forward, which is a long way from where the economy is right now (Fig. 3).