Is Unemployment Really That Bad?

Last week's unemployment figures were like a punch in the gut: After five months of adding jobs, the American economy lost 125,000 jobs in June. But the reality is a bit more complicated than that. The census jobs we've added over the past few months are starting to be removed from the equation, including 225,000 of them in June alone. That's the biggest reason for June's job loss.

The private sector, on the other hand added 83,000 jobs over the course of the month. There's good news and bad news in that. The raw number is higher than we saw in May, when the private sector added only 41,000 jobs. So we're moving in the right direction - but on the other hand, it's still not enough growth to substantially reduce our overall unemployment when population growth is considered.

But the unemployment rate dropped in June, from 9.7 percent to 9.5 percent. Why did that happen, when we lost jobs overall? Two reasons: More workers left the workforce, with another 124,000 people moving into the "discouraged" category, and the seasonal adjustment brought the figure down as well. So while the raw number of jobs lost probably makes the situation look a little worse than it actually is, the unemployment rate makes it look a little better than it actually is. As we've seen so often with this economy, it's one step up and one step back.