The U.S. unemployment rate fell to 9.4 percent in December as the American economy created 103,000 jobs – although those numbers failed to match analysts’ expectations and much of the rate reduction was due to the fact that government no longer counts workers as “unemployed” when they give up looking for work.

Still, the report was much better than November’s dismal data, and unemployment now stands at its lowest level since May of 2009.

Meanwhile, the “underemployment rate” – a broader, more accurate measure of joblessness – slid from 17 percent to 16.7 percent.

“After 18 months of recovery, these are still meager gains,” a researcher with J.H. Cohn in New Jersey told Reuters.

Meanwhile, a California-based portfolio manager said that “the drop in the unemployment rate has more to do with people dropping out of the workforce versus strong momentum on the labor front.”

Let’s certainly hope there’s some momentum in 2011 … preferably the kind that doesn’t depend on additional money-printing from the Federal Reserve.

Over the course of the year that just ended, there certainly wasn’t much momentum. The U.S. economy created just 1.1 million jobs in 2010 – or roughly 94,000 per month. That’s nowhere near enough job growth to keep up with an expanding population – to say nothing of replacing the 8 million jobs that were lost during the recession.

Analysts estimate that the economy must create roughly 125,000 jobs each month simply to keep pace with population growth – which it obviously hasn’t been doing.

As a result, unemployment has remained at 9.4 percent or higher for the past twenty months – well-above the levels U.S. President Barack Obama promised when touting his so-called “economic stimulus.”

December 2010 Employment Situation Summary (U.S. Department of Labor)