Yesterday, the Street was expecting that 175 thousand new jobs were created in December. Overnight, the estimate drifted down to 150 thousand, which is a little suspicious.

This morning, it was announced that 103 thousand jobs were created. That is a lot less than either 150 or 175 thousand, and the market could be expected to drop at the open. However, it also announced that October and November saw 70 thousand more jobs created than earlier reported. So, total employment was indeed up 173 thousand, just over a different time frame. Now, the market looks only slightly weaker.

The headline from this morning’s announcement is that the unemployment rate dropped from 9.8% to 9.4%, which is good news but misleading. This is clearly an anomaly, reflecting a large number of people who have either quit looking or exhausted their benefits. Whenever real job growth takes place, the unemployment rate rises, as fewer people are discouraged and re-enter the workforce. Our unemployment rate will rise soon, if not next month.

A real drop in unemployment would encourage the Fed to start letting interest rates rise. The Fed will not be fooled by today’s report and will keep their foot on the accelerator.