The 7.8% unemployment rate may sound good to Obama supporters who know that no modern President has been re-elected with an unemployment rate above 8%, but we know better. In fact this Americans for Prosperity ad seems to nutshell the situation:

From American Enterprise Institute’s Jim Pethokoukis (who I hope again will be on the program today):

The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%.

Where’s the progress? Here is RDQ Economics:

Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%).  We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility).  Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline.

The numbers are so shady that CNBC asked Labor Secretary Hilda Solis what the heck she was playing at: