A familiar faux recovery

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It is deja vu all over again on the job front.

The Labor Department said the unemployment rate in December tipped lower, dropping to 8.5 percent on the gain of 200,000 jobs.

The government said 212,000 private jobs were added to the economy in December while the public sector predictably lost 12,000.

The unemployment rate dropped two ticks, because November's rate was revised higher, from 8.6 percent to 8.7 percent. Either way, December's data outpaced the expectations of economists, who had predicted a gain of 155,000 jobs and an unemployment rate of 8.7 percent.

Congratulations are, of course, not in order. Not by a long shot. About 7.5 million jobs were erased during the so-called Great Recession that lasted from December 2007 to June 2009.

Demographics belie any sense of premature euphoria. It takes about 125,000 new jobs each month just to break even, because that many enter the workforce each month due to simple population growth.

Furthermore, this year's uptick sounds much like last year's. For the first four months of 2011, recovery was the buzzword -- even if it was defined as tentative. For the rest of the year Europe was the buzzword on Wall Street. Europe this, Europe that. And Europe is still a mess.

The euro on Thursday dropped temporarily below $1.28, leaving many to speculate that the European Central Bank will intervene soon. Ten-year benchmark bond yields are hovering above 7 percent in Italy, a rate often cited as unsustainable. In Portugal yields are at 12.838 percent. In Spain yields hit 5.58 percent this week.

In comparison, 10-year notes were costing the U.S. government 1.995 percent Thursday.

In international markets Friday, the Nikkei 225 index shed 1.16 percent and the Shanghai composite index in China rose 0.7 percent. The Hang Seng index in Hong Kong dropped 1.17 percent and the Sensex in India was flat, up 0.07 percent.

The S&P/ASX 200 in Australia dropped 0.83 percent.

In midday trading in Europe, the FTSE 100 index rose 0.78 percent while the DAX 30 in Germany added 0.33 percent. The CAC 40 in France gained 0.78 percent and the Stoxx Europe 600 rose 0.65 percent.