BOSTON (MarketWatch) -- The news on jobs isn't as bad as it seemed on Friday.

It's worse.

President Obama and Treasury Secretary Geithner were trying to putting on a happy face, but the markets weren't buying. They have tumbled worldwide since the latest payroll data.

But instead of overreacting, the markets may only just be waking up to the real bad news.

1. Look out ahead.

We already know that when you strip out the short-term Census jobs, May's jobs growth was a pitiful 41,000. But what people haven't realized is that the leading indicators for June are even worse. TrimTabs Investment Research Inc. tracks the real-time jobs picture by monitoring income tax deposits at the Treasury. And these have suddenly started falling. Based on the latest data, the firm predicts the economy will actually lose up to 200,000 jobs, net, in June. "The big news is that we have a job loss of about 200,000 coming in June," says Trim Tabs' Madeline Schnapp, "and the market isn't ready for it."

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It's not just the stock market. You can bet that the administration -- and the country -- isn't ready either. Remember, we need to create about 100,000 just to keep up with population growth.

2. One and a half million people have 'disappeared'?

The government says the unemployment rate "edged down" to 9.7% -- keeping it below the politically sensitive 10% level. Read more jobs coverage.

But that's only because about one and a half million people have just, miraculously "disappeared" from the official labor force.

A million and a half people disappearing? It sounds like a crazy conspiracy theory. But there it is, buried in the fine print of the government's own data.

From May 2009 to May 2010, the U.S. "civilian non-institutional population" of prime working age -- 20 to 64 -- expanded by one and a half million, 180.5 million to 182 million.

Yet over the same period the official tally of the labor force over age 20 held steady at just 148 million.

What happened to those extra people?

The Bureau of Labor Statistics doesn't have a full explanation. "We don't have direct questions (in the survey) addressing that fact," said a spokeswoman. But many of the disappeared are "unemployed who have decided not to look for work any more," or who haven't looked for work recently. Anyone who hasn't actively sought a job in the last four weeks vanishes from the rolls.

People dropping out completely are not a bullish sign -- unless, perhaps, one is measuring the unemployment figures for the government.

3. Some of the new "jobs" may not even exist

That's because they're being counted by the Federal Department of Guesswork. Ever since 1994, say economists, Uncle Sam has been using some statistical, er, "adjustments" to the core jobs data to come up with the, er, "true" picture. It will surprise no one that these "adjustments" make the data look better, rather than worse. The government makes estimates about new companies being started up as well as jobs being lost.

Those adjustments may be adding as many as half a million extra "jobs" to the core figure, says independent economist John Williams at Shadow Government Statistics.

In previous recessions, these adjustments may have had some justifications, because new companies formed very quickly in the recovery. But this recession has been unlike any other in our lifetimes, because it was caused by too much debt rather than economic overheating. So the recovery has been different as well. The slump in bank lending and the money supply in the past year suggest new companies are probably being formed far more slowly than in past recoveries, if at all. Bottom line: many of those jobs may not exist.

4. The private sector picture may still be in recession

Some recovery: The number employed in the private sector is still about 900,000 below where it was even a year ago, and about 8 million below where it was in 2007. And remember, it has to keep growing just to stand still, because the population is growing.

"There's practically no growth in private sector employment," says Gluskin Sheff strategist David Rosenberg. Jobs growth was anemic even in the parts of the economy allegedly leading the recovery, such as manufacturing. And now, he says, many leading economic indicators have started to turn down again.

The jobs growth is so slow, Rosenberg says, that by his calculations "it is going to take years, probably five to seven years, before we recoup the employment (lost) from the Great Recession," he says. Five to seven years? "There's a significant chance," he adds, "that for the first time ever we will go into the next recession without having seen a new peak in employment."

5. And as for earnings...

In the quest for some more cheerful news, the government said for those who do have jobs, average hourly earnings were up 1.9% from a year ago.

Good, yes?

Er, not really.

The government also reported that those workers produced 2.8% more goods and services per hour. So they actually got paid about 1% less for each widget they made, TV they sold, or meal they served. Oh, and over the same period consumer prices rose 2.2%. So even those lucky enough to be working have gone backwards -- before taxes.