How can it be that an unemployment rate is low for an area - but locals say the economic condition is bad?

Answer 1

Just looking at the rate is not the best idea because it doesn't take it to account people who have stopped looking for a job or people who make substantially less money than at a previous job where they were laid off.

Economists have called the past couple of years a "Jobless Recovery".

Answer 2

Another reason is that they are taking the statistics of people who are actually on unemployment benefits.