Jobless Rate Rises, Unemployment Falls?

The clown in the White House will probably be doing a victory lap today even though more people than ever are out of work.

The U.S. unemployment rate unexpectedly declined in January, but the economy continued to shed jobs and revisions painted a bleaker picture for 2009, casting doubt over the labor market's strength.

The unemployment rate, calculated using a household survey, fell to 9.7% last month from an unrevised 10% in December, the Labor Department said Friday. Economists surveyed by Dow Jones Newswires had forecast the jobless rate would edge higher to 10.1%.

Meantime, nonfarm payrolls fell by 20,000 compared with a revised 150,000 drop decline in December. Economists had expected payrolls to be flat. The December figure was revised down sharply from an originally reported 85,000 drop.

The Labor Department's annual benchmark revision to the survey that produces the monthly payroll report painted a bleaker 2009 picture. Last year, job losses were almost 600,000 more than previously reported, the revisions showed.

The January report was influenced by several special factors that may not be consistent with the underlying jobs trend. Temporary hiring for the U.S. 2010 census collection helped the employment picture in January, while the unusually cold weather probably hurt it. The interaction of a very bad employment year in 2009 with January seasonal factors clouds the picture further, analysts warned ahead of the release.

"We will be inclined to treat either a very strong or a very weak employment report -- particularly the payroll portion -- with a greater than usual skepticism," Goldman Sachs economist Andrew Tilton warned in a note.

The so-called "underemployment" rate--which includes everyone in the official rate plus those who are neither working nor looking for work, but say they want a job and have looked for work recently--fell to 16.5% in January from 17.3%.

Despite all these bleak numbers, the media will no doubt today portray Obama as some kind of hero and tell us the stimulus is working.