We should all face the fact that markets are looking for the unemployment rate to stay somewhere above 7% as this will allow for the FED to continue to pump money into the system. So, it is no surprise that a slight tick up in the rate to 7.8% will not be too concerning.
At the same time, the labor participation rate is still near lows, which is another interesting piece of this puzzle. For now, the low rate is keeping the actual level of unemployment artificially low. Even so, with the consumer confidence numbers hitting lows and the concerns over the Fiscal Cliff, this is not a bad report overall.