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Topline
Though unemployment fell to its lowest level in nearly two years, the U.S. added back a worse-than-expected 199,000 jobs in December—signaling the labor market is still struggling to add back jobs lost during the pandemic amid the looming threat of the omicron coronavirus variant.
People wait in line as city workers hand out take-home Covid-19 test kits in lower Manhattan on … [+] December 23.
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Key Facts
December’s new job gains were significantly less than the roughly 422,000 new jobs expected by economists, according to data released Friday by the Labor Department, spurred by a monthly decline of 12,000 government jobs, compared to a gain of 211,000 jobs in the private sector
Despite the worse-than-expected report, the unemployment rate clocked in at 3.9%, compared to 4.2% in November—hitting its lowest point in more than a year but still well above prepandemic levels of about 3.5%.
The number of unemployed people in the United States fell by 483,000 to 6.3 million, which is much better than pandemic highs around April 2020 but still more than the 5 million in February 2020, the government said.
What We Don’t Know
How the latest surge in Covid cases will impact the job market’s recovery. The Labor Department surveys around the 12th of each month, meaning it will take “a few more weeks” before omicron’s economic impact is reflected in the data, Moody’s Analytics Chief Economist Mark Zandi wrote in a weekend note.
Key Background
In a Tuesday email, Mark Hamrick, a senior economic analyst at Bankrate, said it’s “difficult to measure” the economic impact of the omicron variant at this point and cautioned against dismissing its potential, pointing out widespread worker shortages, stoked in part by lingering concerns over the pandemic, remain a big uncertainty. Economists surveyed by Bankrate said the variant could weigh on job growth in the first three months of the year, but estimated the unemployment rate will fall to 3.8% in a year. Zandi shared a similar word of caution, saying “risks are rising,” and forecasting that the economic recovery “is set to turn soft” as omicron stunts business. Amid the latest surge, credit card spending and restaurant bookings have already dropped substantially, while widespread flight cancellations have been another economic concern, Zandi notes.
Further Reading
U.S. Labor Market Recovery Lost Steam In November With A Sluggish 210,000 New Jobs (Forbes)
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