“We believe the relentless decline in labor force participation is nearing an end,” said Bank of America Merrill Lynch economist Neil Dutta, in a note to clients. “The recovery in jobs will gradually lure discouraged workers back into the labor force.”

Payrolls for February jumped by 192,000, bringing the unemployment rate down to 8.9 percent, the lowest since this bull market began. However, the unemployment rate makes things look better than they actually are, particularly during the more vicious recessions, by counting only the people that are seeking work. In fact, Dutta points out that if the rate kept dropping at the same pace of the previous three months, it would hit an eye-popping 6 percent by the end of this year.

That won’t happen, ironically, because the workers that have given up will be encouraged by that falling rate and break out the classifieds again, swelling the numbers in the workforce. This is why the figures today are a double-edged sword for investors and the Federal Reserve trying to meet its mandate of “full employment.”

“If the Labor Force Participation rate were to return to its 25-year average of 66.1%, the unemployment rate would be 11.6 percent right now -- not 8.9 percent,” notes Alan Zafran, a partner at Luminous Capital.

The bigger question is will there be jobs someday for those who start looking again, in addition to the persistent population that has kept going on job interviews? (To get an idea of how persistent they have been, consider that almost half of the unemployed have stayed that way for a jarring six months.)

Bank of America’s Dutta writes, “With a sizeable portion of the potential workforce being separated from employment for long periods of time, the risk is that their skills will deteriorate and thus that they will have a much more difficult time reacquiring jobs.”

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.





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Trader disclosure: On March 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns (VRTS); Terranova owns (C); Terranova owns (UPL); Terranova owns (ABT); Terranova owns (MS); Terranova owns (PBR); Terranova owns (BAX); Terranova owns (TEVA); Terranova owns (CVI); Terranova owns (RSX); Terranova owns (SU); Terranova owns (CNQ);Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (MDY); Finerman's Firm is short (XRT); Finerman's Firm is short (IJR); Finerman's Firm Is Long S&P Puts; Finerman's Firm Is Long Russell 2000 Puts; Finerman's Firm And Finerman Own (AAPL); Finerman's Firm Owns (BAC) Leap, Finerman Owns (BAC); Finerman's Firm Owns (BBY); Finerman's Firm And Finerman Own (BP); Finerman owns (C); Finerman owns (GM) leaps; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (HPQ); Finerman's Firm Owns (IBM); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM); Finerman's firm owns (M); Finerman's Firm And Finerman Own (MSFT); Finerman's Firm Owns (WMT); Pete Najarian owns (CNI); Pete Najarian owns (DOW); Pete Najarian owns (MO) calls; Pete Najarian owns (SA) ; Pete Najarian owns (TCK); Pete Najarian owns (BAC) calls; Pete Najarian owns (C); Pete Najarian owns (F) bonds; Pete Najarian owns (GE) ; Pete Najarian owns (JPM) calls; Pete Najarian owns (MS); Pete Najarian owns (STJ) calls; Karabell owns (GE); Karabell owns (AAPL); Karabell owns (FXI); Karabell owns (IBM); Karabell owns (GOOG)



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