Soaring equity markets and surging confidence on Main Street appear to have combined with misleading unemployment data to put a positive spin on the nation's job situation -- which is likely to be reflected in President Barack Obama's State of the Union address on Tuesday. However, the reality is that the job situation deteriorated significantly in January, meaning that hopes of finding a job today are no better than they were a year ago. Whatever tone the president uses to describe today's job situation, he should do more than offer partisan solutions, instead seeking a bipartisan approach to job growth.
While the government reported a modest uptick to 7.9% in the seasonally adjusted unemployment rate in January, the unadjusted rate increased to 8.5% -- up nearly a full percentage point from December's 7.6%, and just 0.3 points below the 8.8% unadjusted rate of a year ago. While seasonal adjustments smooth out the unemployment numbers as intended, they tend to distort real-world job market conditions -- those faced by job seekers. These are better reflected by unadjusted unemployment rates that show jobs were a lot harder to get in January.
A deeper dive into the government's unadjusted unemployment data shows that the number of employed Americans declined by 1.4 million in January, while the ranks of the unemployed increased by 1.3 million. As a result, the 0.1-point decline in the participation rate was unable to head off a surge in last month's unadjusted unemployment rate.