When I saw the employment situation summary on the Department of Labor website this morning — announcing that the January 2011 unemployment rate was 9.0 percent — I thought, “Wow!” It is hard to be excited about a 9.0 percent unemployment rate, but this figure dropped by .4 percent in both December and January. Just two months ago the unemployment rate was 9.8 percent. Evidently I’m not alone in my reaction, because I saw several news reports this morning with analysts who were also surprised at the new figure.

Although unemployment dropped to 9.0 percent, there were only 36,000 nonfarm payroll jobs added during the month. The big change came from the 600,000 people who are no longer considered unemployed. Among those who aren’t counted as unemployed are the 2.8 million marginally attached workers. This is up from 2.5 million in January 2010. Marginally attached workers are those who want to work but didn’t actively look in the past four weeks. So while they are technically unemployed, they are not counted in the unemployment figure.

Of the 2.8 million marginally attached workers, 1 million are considered discouraged workers. They stopped looking for work because they don’t believe that they can find a job. This is a bit disheartening because you definitely can’t find a job if you aren’t looking. No matter how hard it is to land a job, you won’t gain employment if you don’t try. The other 1.8 million didn’t seek work because of other reasons, including returning to school to gain new employment skills.

It feels a little weird to celebrate a 9.0 percent unemployment rate but we’ve seen a big drop in just two months. From the unemployment perspective, the economy is faring better than some predicted. In November 2010, the National Association for Business Economics (NABE) predicted that unemployment would stay above 9.0 percent for 2011 with a 9.5 percent or higher rate expected during the first quarter. The good news is we’ve already bested that prediction; the not-so-good news is there are still 11 months left in the year. Hopefully this downward trend continues and we will start seeing hundreds of thousands of new jobs added each month.

January 2011 unemployment falls to 9%
It feels a little weird to celebrate a 9.0 percent unemployment rate but we’ve seen a big drop in just two months.