White House braces for bad Omicron jobs numbers
Job growth numbers may be about to turn negative for the first time since President Biden took office, and the White House is seeking to get ahead of potential negative headlines.
The big picture: Vast numbers of Americans missed work this month due to the Omicron variant, and that is likely to drag down January jobs numbers. But the White House believes these effects will be temporary.
- In a winter of economic discontent, the good news has been that the job market has been booming. The virus surge undermined that in January.
The details: Jobs numbers are based on how many people are working during a "survey reference week" that is generally the calendar week that includes the 12th of the month. This month, that was Jan. 9 to Jan. 15.
- Covid cases peaked in precisely that span, with the highest seven-day average case count coming on January 15, according to the CDC.
- Hourly workers who were not paid that week because they were out sick, caring for someone, quarantining, or because their employer temporarily shut down would subtract from payrolls.
By the numbers: That explains why forecasters surveyed by FactSet were projecting only 162,500 jobs added in January, which would be the weakest since December 2020. There is some reason to think the number could turn out to be significantly worse than that.
- In early January, 8.75 million people Americans said they were not working because they were sick with COVID or caring for someone who was sick with COVID, according to a Census survey, up from 2.96 million in early December.
- Andrew Hunter with Capital Economics, for example, projects that the surge in COVID cases will reduce payroll growth enough to leave net job creation at negative 200,000.
The best hope for the job market — and the narrative Biden advisers aim to reinforce — is that any contraction in employment reported in the January is rapidly reversed as the Omicron case counts plunge.
- "Forecasters see a large Omicron effect on employment in January but expect that to reverse in future months as we see the wave beginning to come down," David Kamin, deputy director of the White House National Economic Council, tells Axios. "That is very different from overall trends in the economy looking ahead."
- Officials emphasized that they have no early inside track on the data. (Senior officials see the report Thursday night before the release.)
The bottom line: In a bleak month, those caveats might not do much to blunt the impact of some disappointing numbers in the area where the Biden economy has been strongest.