The big news in today's release from the BLS is that the unemployment rate fell to 8.6 percent from 9.0, the first time it has been below 9% since April 2009. As I have stressed, changes in the unemployment rate are not always consistent with changes in labor market conditions. A lower unemployment rate can mean that things have gotten better, or that they have gotten worse. It is necessary to look into changes in the components of the employable population to see if the news is good or bad.
Well, the good news is that the number of people reporting that they are employed rose by 278 thousand (note that this is not the payroll survey but the household survey). But, the number of people reporting that they are unemployed fell by much more--594 thousand--meaning that 315 thousand left the labor force altogether (i.e. they were not employed or looking for work).
These numbers don't tell the whole story either because the population of working age is always changing, which, in itself, will affect every other number. For these reasons, the best variable to look at is the employment-to-population ratio, which rose by one tenth of a percentage point to 58.5.
This was the fourth month in a row that the employment-to-population ratio rose by 0.1, which put it below its post-recession peak of 59 percent. Still this trend is certainly a sign that the job picture has been improving since mid-summer. As the chart illustrates, however, this rate of recovery is pathetically slow in that, if this rate continues, the employment-to-population ratio will not reach its pre-recession level until mid 2015, about 3 1/2 years from now (the dotted line).