Why did the unemployment rate drop so much? There are good reasons and bad. While the economy is in fact adding jobs, it is also true that many Americans may have given up looking.
After months of hovering around 9 percent, the US unemployment rate took a sudden turn for the better in November, falling to 8.6 percent.
Call it holiday cheer. Call it relief for workers who value job security. Call it hope for would-be workers without jobs.
It may be all those things, but why did it happen?
The sharp improvement seems puzzling, at least on the surface. The same labor report showing the jobless-rate dive also found that non-farm employers added 120,000 jobs during November. That's OK, but nothing better than other typical months throughout this whole year. Meanwhile the unemployment rate had (with some ups and downs) gone from 9.0 percent in January to that exact same number in October.
Often, economists say 120,000 jobs is just enough to keep the jobless rate from rising, because about that many newcomers can arrive in the labor force in a given month. A hundred thousand jobs is a drop in the bucket, with some 154 million people in the work force.
Also, it's rare for the unemployment rate to move that much in a single month. The last 0.4 percentage-point change, for the record, came about a year ago, in December 2010.
The latest month's puzzle has several explanations. Some are upbeat, signaling genuine progress in the job market. But this is also a case in which the economy's reality may not be as strong as the headline number implies.
First, let's deal with the bad news.