Is America’s jobless rate really falling, or have we simply given up?

The headline rate fell in March to 8.2 percent, what would seem like good news for the White House. It will be hard for President Barack Obama to run on “things are slightly better than before,” particularly if housing continues to slip and the price of gas and food rise. He needs the rate to fall convincingly.

But the March jobs report was woefully inadequate by any measure, adding just 120,000 jobs after several months of 200,000-plus net job growth.

Editor's Note: Obama’s Economic ‘Fix’ is In . . .

Yet the rate fell anyway. Put simply, the rate is falling because fewer people are looking.

Indeed, the “labor participation rate” fell in March to a seasonally adjusted 63.8 percent, from 63.9 percent in February.

“It’s been falling since January 2007, when it stood at 66.4 percent. It slid to 65.5 percent in July 2009, as the recession was officially ending, and currently sits near a 30-year low at 63.8 percent,” writes Paul Vigna at The Wall Street Journal blog MarketBeat.

“If you applied the July 2009 number to today’s pool of potential workers, unemployment would be somewhere north of 10 percent. If you applied the 2007 number, unemployment would be 11.8 percent.”

Of course, even at 8.2 percent, nothing has changed for most people: 12.7 million remain unemployed, according to the Bureau of Labor Statistics.

Of those, the long-term unemployed total 5.3 million, and an additional 2.4 million are “marginally attached,” meaning they are available to work but have given up looking and thus aren’t counted as unemployed.

Without more of them working and earning a steady paycheck, the recovery may be on hold. Consumer spending is a big part of GDP growth.

Fewer workers means lower growth in any calculation; it’s why Japan has been stagnant for decades and why China is at risk in the not-too-distant future.

Vigna goes on: “That means fewer people to contribute to economic growth. Fewer people to pay taxes. Fewer people to help the U.S. earn its way out of a $15 trillion debt hole (if indeed anybody thinks that’s even possible.)”

It can be very hard to even try to guess what’s coming next. Unemployment applications rose to a seasonally adjusted 380,000, the Labor Department said Thursday. The four-week average is now 368,500.

That’s far more than the 120,000 jobs added in March, yet the headline figure higher might decline anyway if the participation rate continues to drop.

Why would participation drop? One school of thought is simply that the baby boomers are retiring and reducing the workforce headcount. There are fewer jobs but also fewer people to employ.

Moody’s projects the unemployment rate will fall to under 8 percent by year end. The Federal Reserve is aiming for a number between 5.2 percent and 6 percent. Declining participation might get them there.

Meanwhile, job seekers (those that are left and even trying) seem to have caught a bit of wind in their sails. New data shows that more than half of the jobs that went empty in February were voluntary separations. People just walked off jobs.

Fifty-one percent of all job separations came from workers quitting, according to the government’s Job Openings and Labor Turnover Survey (JOLTS), the first time quitters were in the majority since September of 2008, according to a report from CNBC.

Editor's Note: Obama’s Economic ‘Fix’ is In . . .