In an Outlook folder, sometimes even though I marked all messages as read, the folder list shows "1", as if there's an unread message.
Note: This is Outlook connected to a corporate Exchange server.
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In the "Search Current Mailbox (Ctrl+E)" box, type: read:no and hit Enter.
Then when it shows, "Find More on Server" link, click it. The unread email should appear. Make sure you click on it if it doesn't automatically switch to read.
Click the "X" in the search box to clear the "read:no" search -- it does not work if you do any other operation, including clicking on another box, at this point!
Frustrating, but fixable, thankfully.
I found this usually happened when someone on your network sent a message, then UN-sent it. You can ask your admin person to turn it off, but I think it's on for a reason.
The answer above would definitely reset the counter. I can't remember in outlook, but I know in my email program at work (first class), I can right click the folder, choose "Mark as Read", and the system does a manual recount to zero
It's definitely a difference between server data and local (cached) data and that was resolved by @Jonathan's workaround (both server data and local data are now showing as 0KB in properties under the folder size); however the unread item count remained problematic.
I found that the issue appeared resolved if I switched the folder from showing the total number of items to the number of unread items, which suggests there is a hidden item in that folder (although there can't be as it's 0KB in size!). Looking at How to fix the wrong number of unread emails flag in Outlook? led me to outlook.exe /cleanviews. That didn't seem to work immediately, but after a while (and having received new mail in the "problem" folders) I noticed the phantom messages were no longer there...