No. 5: Unemployment

“The unemployed need not apply.”

This is the line that greeted some job-hunters as they scanned the want ads this year. And with more than 4 million Americans out of work for a year or more, and an outlook that tells us higher unemployment rates should be the norm for a while, such instructions came as one more blow in a frustratingly sluggish labor market.

But some relief did just come for the long-term unemployed: The House and Senate have reached an agreement to extend the payroll tax, along with emergency unemployment benefits for those in the hardest-hit U.S. states, for at least two months (they were set to expire on Dec. 31). This means that, at least for now, certain job seekers won’t see less money in their wallets in 2012 — and we all know what lighter wallets can mean for the economy.

Signs of improvement
Recent economic data, including jobs reports, have shown some signs of improvement, easing fears of a double-dip recession. The Bureau of Labor Statistics numbers for November showed an uptick of 120,000 on the payrolls, basically in line with expectations (although well below the ADP estimate of 206,000). Notably, the unemployment rate, stuck stubbornly at or above 9% for the past two years, dipped unexpectedly to 8.6%, the lowest since March 2009. That’s a good headline number, but if you dig beneath the surface, there is less reason for enthusiasm. The fall in the unemployment rate coincided with a drop in the overall labor force of 315,000, which is the most since January of this year. As Yahoo! Finance’s Daniel Gross notes, “In a truly healthy labor market, both the number of people working and the labor force would be growing.”

The private sector has been steadily adding to payrolls in 2011. But government positions are routinely being slashed (20,000 were lost in November), and much of the jobs growth has been in the lower-paying service sector. The U6 number (what some call the “real” unemployment rate) also fell month to month, but it still stands above a dismal 15%. Recent weekly unemployment claims have fallen below the key 400,000 level as exports hit highs. But if the ongoing debt crisis in Europe pushes the region into recession, export demand will be slashed — and political instability overseas and here in gridlock-happy America is giving corporations pause when it comes to hiring.

The housing market and jobs have a chicken-and-egg quality: Is the anemic labor market feeding the slumping housing market, or vice versa? If housing stays in the dumps, how will the economy grow enough to handle the thousands of new employees entering the labor market each year?

Jobs bill DOA
President Obama had no luck pushing his full $447 billion jobs bill through Congress; the bill was dubbed DOA by majority leader Eric Cantor as soon as it was unveiled. Proponents argue that Obama’s bill should, at the least, be passed piece by piece. Critics say the plan offers little but old methods that have failed before.

There are also disagreements on how far the Fed should carry its mandate to boost employment. Some say that the Central Bank has already done too much asset purchasing, while others — including Chicago Fed President Charles Evans — say more-aggressive tactics are needed to get Americans back to work.

The upshot: We need to create many more jobs per month to see a hefty chipping away of the unemployment rate, and currently the economy — while improving — remains too weak to put a meaningful dent in that number.

Note: This post was updated to include the November jobs numbers.

Rebecca Krasney Stropoli oversees news coverage on Yahoo! Finance. Before joining Yahoo! in 2007, she worked in a variety of editorial settings, including educational publishing houses and trade magazine newsrooms.