There is some good news here, but not nearly as much as the drop would would have you think. There is a lot of discouraged workers in the drop, but it was not all discouraged workers.
"There’s two things I can deal with right now; the U-3 unemployment rate, and the non-farm jobs added. While the official unemployment rate dropped down to 8.6%, that is much more a function of people departing the workforce than people finding a job. The Atlantic managed to screen-cap the major parts of the household data, the basis of the unemployment figures (H/T – Jason Whitman.) The civilian labor force dropped by 315,000, which caused the participation rate to drop to 64.0%, down from 64.2% in October. James Pethokoukis ran the numbers, and declared that if the participation rate were the same as last month, the unemployment rate would be 8.9%. Worse, if it were the same as when President Obama took office, it would be 11%.
The 315,000 seasonal drop in the civilian labor force is almost unprecedented for a November. Since 1982, there have been only 7 times the labor force has dropped between an October and a November, and only 3 times has the drop been even close to this steep. In 2002, 273,000 departed the labor force, in 2008, 332,000 departed the labor force, and in 2009, 227,000 departed the labor force.
Related to that, the number of people not in the labor force, but who want a job now, rose to a seasonally-adjusted 6,595,000, the highest since the first month that statistic was tracked, January 1994. As a percentage of the civilian population, the 2.74% rate is the highest since June 1996.
The final bit of bad news was dug up by Zero Hedge – the average duration of unemployment rose to a new record of 40.9 weeks from the prior 39.4 weeks."