Unemployment rate dips slightly but overall jobs picture worsens

Yesterday, the Labor Department reported that the unemployment rate dipped in July from 9.5 percent to 9.4 percent. This was the first time in 15 months that the unemployment rate declined.
This decline, however, was the result of nearly half a million people removing themselves from the labor market — i.e. not seeking work. The unemployment rate does not deem people who have given up searching for work to be “unemployed.”
The true employment picture actually worsened overall in July, as employers slashed 247,000 jobs. On the other hand, this is the smallest decline in jobs in nearly a year.
What to make of all this? Employment is a “lagging indicator” when an economy recovers. Thus, we can expect the true employment picture to get worse before it gets better.
On the other hand, it seems clear that the economy will begin to recover, if it isn’t doing so already (the real questions are: will the recovery be as robust as normal; will it be undermined at some point by inflation; and will we see “double dip” recession, which I doubt). And eventually, the recovery will produce a commensurate increase in jobs. What we don’t know is how soon the job market will rebound
The July figures don’t have a great deal to tell us about these questions. I noticed, however, that the stock market had a big rally on the news of the July figures. The Dow and the S&P both closed at highs for the year. This is may be a more reliable indicator of how to view the latest employment numbers than the opinions of partisan bloggers.