Friday’s December jobs report was a major disappointment, showing the economy gained just 74k jobs last month. Economists had expected the economy to gain around 200k jobs. The unemployment rate, however, dropped to 6.7% as 347k frustrated job-seekers gave up and left the labor force. We are in an upside-down world where a drop in the unemployment rate is a bad sign for the economy.
The overall labor force shrunk dramatically last year. In December 2012, 155.4 million workers had a job or were actively looking for one. Last month, though, 154.9 million were in the labor force, a drop of over 500k Americans.