According to the Labor Department, unemployment rates dropped from 9.8% to 9.4% in December. Sounds like great news! However the economy only added 103,000 jobs; significantly fewer than experts had predicted. So far, I’m calling “Cautious Optimism” the theme for 2011.
While a sharply lower unemployment rate was a welcome surprise, some experts said that drop was mostly due to a shrinking workforce.
"A lower unemployment rate is a mixed blessing," John Silvia, chief economist at Wells Fargo said in a note. "Yes, we are getting more people employed but we appear to be losing people into the woodwork -- not a good sign long term."
Economists surveyed by CNNMoney were expecting the unemployment rate to ease to 9.7%, from 9.8% in the previous month.
The payroll number was a clear disappointment. Economists predicted a gain of 150,000 jobs, and many had boosted their forecasts earlier in the week, after private payroll processor ADP released a shockingly strong report.
While that report is often seen as a bellwether for the Labor Department's number, this is the second month in a row that the government figures came in disappointingly lower.