“Unemployment rate falls as more people stop looking for work,” Kenneth Schortgen, January 7, 2011

The economy needs to create 125,000 new jobs per month simply to keep up with the population demands for work.  You will notice that even during December, one of the highest months for hiring due to temporary retail needs, only 110,000 jobs were created, and thus there was a deficit of 15,000 jobs last month simply to stay even with the population.

Secondly, the Labor Department does not record those unemployed who are not out actively looking for work.  Once someone falls off the unemployment benefit roles, there is no requirement to apply for jobs to ensure benefits. When these people fall off, they are no longer counted in the unemployment data.

While the economy hiring 110,000 new workers is much better news than we have had in the last three years, at least 250,000 jobs need to be created each month to validate growth.  Even with 250,000, it would take at least 28 months of this to employ the more than 7 million who have lost their jobs since the recession began.

The government models tell you the unemployment rate is now at 9.4%.  The real data and true unemployment however is at 17%, and will only get higher until we begin to see consistent job creation at least double what December provided.

http://www.examiner.com/finance-examiner-in-national/unemployment-rate-falls-as-more-people-stop-looking-for-work