Today's employment report shows that the unemployment rate fell sharply to 9.0 percent and private sector payrolls increased by 50,000 in January. Revisions to private sector payroll data show that 1.1 million jobs were added during 2010, the strongest private sector job growth since 2006. The 0.8 percentage point decline in the unemployment rate over the past two months is a welcome development; however, the rate remains unacceptably high.

... Overall payroll employment rose by 36,000 last month. Among the sectors with the largest payroll employment growth were manufacturing (+49,000), retail and wholesale trade (+36,700), and professional and business services (+31,000). Transportation and warehousing (-38,000), construction (-32,000), finance (-10,000), and local government (-10,000) were among the sectors that subtracted from the total. Severe weather in some parts of the country may have impacted employment and hours in some industries.

The 0.4 percentage point decline in the unemployment rate to 9.0 percent in January was accounted for by a large increase in employment as measured by the household survey (which is separate from the payroll survey). The labor force participation rate was unchanged.

This was truly unexpected, given that the Gallup Unemployment Survey, which was released a day before the official White House unemployment numbers, put the January unemployment rate at 9.8%, with an underemployment rate measured at 18.9%.

Although the labor force participation rate remains relatively unchanged between December 2010 and January 2011, comparing the January 2010 and January 2011 numbers reveals a drastic decline.  We are currently at a 26 year low in labor force participation (if you recall, 1984 was when America was just beginning to fully recover from the massive 1981-1982 recession and the period of crippling stagflation that immediately preceded it) with little immediate improvement in sight. 

In other words, we may have added 1.1 million jobs in 2010, but at the same time we had over 2.2 million Americans drop out of the labor force, which is hardly anything to be excited about. 

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PS - if you really want to compare employment during 2009-2010 with employment during the Bush presidency, the overall labor force participation rate is a good place to start.  There was a decline of 1% between 2001 and 2004 (which was the inspiration for Nancy Pelosi's famous "where are the jobs, Mr. President" speech), but the rate remained relatively steady at 66% from 2004 until the end of 2008.  Since that time, the rate has declined nearly to 64%, with no up-trend visible.  Ms. Pelosi, I believe that's your cue ...