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Not-So Obvious Takeaways from Jobs Report

NEW YORK ( TheStreet) -- It pains me - yea, kills me -- to say it, but Don Rumsfeld may have had a point after all.

"You go to war with the army you have---not the army you might want or wish to have at a later time," Rumsfeld said in 2004, as Iraq descended into chaos. This morning's January jobs report is no Iraq - but with an unemployment rate falling to 6.6% and 113,000 new jobs, the report shows a job market that, while not ideal, is more than good enough for the economy we have.

The story is a combination of simple arithmetic and some clear and present trends in the 2014 economy.

The arithmetic is that the economy doesn't need as many jobs as people might assume. The conventional wisdom used to be that economic growth couldn't bring down the unemployment rate unless it created 150,000 to 175,000 jobs a month. But thanks mostly to retiring baby boomers, economists such as Barclays' Dean Maki estimate that number is more like 90,000.

Indeed, if you look at the government's current population survey, the number of folks in the work force has climbed only 800,000 - since December 2008. At that pace, adding 194,000 jobs a month, as the economy did in 2013, will make a dent in the unemployment rate PDQ.

That pace only stands to pick up this year. Consensus forecasts call for nearly 3% economic growth --- almost half again as fast as last year. More important, the details of today's report show where that will translate into jobs, in a pattern that has been visible for months. The categories where we most need to see new jobs are where they are showing up now - or soon will.

Most important, January's 48,000-job gain in construction will lead to more growth, as housing starts go from a little over 900,000 last year to between 1.04 million and1.35 million, depending on whose forecasts you like. The rule of thumb is at least three jobs per additional housing start. Do the math.

The other thing that will fix - almost immediately - is this month's loss of 29,000 government jobs. With state governments' finances in better shape than they've been for years, there won't be many (if any) more months like this. With fiscal drag set to move to near zero this year, the persistent shrinkage of government employment will at least even out.

That lets me make a prediction as bold as Dick Cheney's boast that Iraqis would welcome U.S. troops as liberators in 2003: Unemployment will be under 6% by the end of this year, which at this point will require less than a million new jobs. The only tough question, really, is whether it will get there in time to influence the mid-year election, the same way it dropped below 8% just in time to sink Mitt Romney's hopes .