Calculating the unemployment rate can be a tricky business. "Participation" this past month came in at 63.6 percent, the lowest in more than two decades. People who do not participate, who have become too discouraged to look for work, are excluded from Labor Department consideration.
As Guy LeBas from Janney Montgomery Scott, a Philadelphia brokerage firm, explains: "The household survey has become an increasingly misrepresentative labor market indicator, mostly resulting from fairly sharp changes in the composition and size of the labor force. For September, the unemployment rate slid .4 percent to 7.8 percent, an amazingly large decline. The big drop was the combined result of a reduction in labor force participation… and a bizarrely big increase in household employment of 873K."
The "bizarrely" large increase was in good measure the result of upward revisions from statistics released in July and August.