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A Welcome Reversal

The country (and especially the Obama administration) got some much needed good economic news this morning. While the consensus prediction had been that the unemployment rate would hold steady at 10.2 percent, it actually fell to 10 percent. And there was a net loss of only 11,000 jobs in November, while October job losses were revised downward from 190,000 to 111,000.

This adds to the growing number of signs that the Great Recession is over and that we are now climbing slowly up the other side of the valley. But no one expects that the jobless rate will decline quickly or that job creation will increase at the same pace at which the economy grows.

The administration will inevitably make the post hoc ergo propter hoc assertion that its policies have produced the good news. But they might want to be careful about that. Curiously, the good news on unemployment this month might well generate bad news next month. The rate only counts people who are looking for work. People who have given up looking don’t count. If enough of these discouraged workers start sending out résumés again because of the good news, that could send the rate right back up if job creation does not accelerate sharply, which is unlikely.


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