Last Friday’s unemployment rate drop of 0.4% to 8.6% gave the Obama administration a couple of bragging points on the economy, an area where the President clearly needed some good news.  But just how good was it?  Gallup’s job-creation index shows that the drop in the jobless rate may be much ado about nothing:

Job market conditions in the United States were flat in November, as Gallup’s Job Creation Index remained at +14, similar to the range seen since May. This is another indication that Friday’s sharp drop to 8.6% in the government’s U.S. unemployment rate may be overstated.

Gallup’s Job Creation Index generally has been flat since it hit +14 in May. Still, it is up three percentage points from a year ago and remains higher than the monthly readings Gallup found throughout 2009 and 2010.

The Job Creation Index of +14 is based on 32% of workers nationwide saying their employers are hiring and 18% saying their employers are letting workers go — the same as in October. Hiring was at 30% and firing at 19% in November 2010.

At CBS’ Money Watch, Steve Tobak offers disgust at the media’s analysis of November’s jobs data.  The decline, Tobak argues, results from an artificial decline in the denominator that the BLS uses to calculate the rate — as workers leave the system altogether:

Reading the media coverage from Friday’s Labor Department employment report, you’d think things are looking up for the economy and the unemployed. Well, they’re not. And while I hate to be the bringer of bad news, there are things I hate even more, like optimistic sound bites that hide the big picture and selfish politicians who mislead the public.

Yes, the unemployment rate dropped to 8.6 percent and we added 120,000 jobs in November. Whoopee. Roughly half the improvement is because 315,000 workers finally gave up on finding a job and the other half is from seasonal jobs in retail, restaurants and bars. Not only that, but we need to add about 100,000 jobs a month just to keep up with population growth.

Instead of fishing for good news in a monthly report, if you look at the big picture, you can’t help but see that we’re still in deep you-know-what.

Although the economy has been adding roughly 100,000 jobs per month on average, that’s a drop in the bucket compared to the eight million plus jobs that were lost in the Great Recession, or whatever you want to call the mortgage crisis and banking meltdown.

At 34 months and counting, this is the longest streak of greater than 8 percent unemployment since they started tracking it monthly in 1948.

The real story is shown in this graph from BLS, which records the trajectory of civilian participation in the workforce over the last 30 years:

The civilian participation rate in the workforce dropped 0.2% to 64.0% last month, barely above the 30-year low of 63.9% achieved in July of this year.  The reason that both the topline and U-6 numbers declined is that both are based on the base number of workers, actual and potential, in the labor force that have plummeted in the last two years.  The dramatic reduction in this number is what allowed a gain of only 120,000 jobs — which only covers the population growth in a month — drop unemployment by 0.4%.

In other words, the drop isn’t an indication of hope — it’s an indication of despair.