Biden hopes for big jobs number on Friday
President Biden and Democrats are counting on a resilient U.S. economy to deliver a strong December jobs gain Friday when the Labor Department releases its monthly employment report.
With COVID-19 cases surging and Biden’s approval falling, the December jobs report could provide a sorely needed boost to the president’s attempts to soothe concerns about snags in the economic recovery.
Economists expect the U.S. to have gained roughly 420,000 jobs, according to consensus estimates, even after the emergence of the omicron variant in late November. Optimistic analysts are pointing to a string of remarkably low jobless claims, strong private sector data, and omicron’s limited presence in the U.S. until the second half of December.
“High-frequency indicators suggest that labor demand held up well at the onset of the Omicron wave. Moreover, the lack of available workers has pushed layoffs to fresh record lows in mid-December as evidenced by the decline in initial jobless claims to its lowest level since 1969,” wrote Lydia Boussour, lead U.S. economist at Oxford Economics, in a Wednesday preview.
She is projecting a gain of 405,000 jobs in December — a tick below the consensus but almost twice the November addition of 210,000 jobs.
“There’s a risk that the emergence of the Omicron variant in late November kept people away from job seeking and temporarily curbed hiring in high-contact services sectors in December,” Boussour continued, “but we think it may have been a little too early for the December jobs report to capture some meaningful downside from the variant.”
Scores of businesses and schools have reduced face-to-face interaction as cases spiked in the second half of December. Even so, most of those cancellations occurred after the Labor Department conducted the two surveys used to compile the jobs report, which likely reflect little of the omicron shock.
While economists are still concerned about omicron’s immediate damage to the leisure and hospitality sector and longer-term impact on the broader economy, the labor market has appeared to hold strong during the start of the surge.
New weekly claims for unemployment benefits have lingered close to 200,000 since mid-November, roughly 20,000 applications below pre-pandemic levels, a sign of few layoffs beyond seasonal patterns. A record 4.5 million Americans quit their jobs in November as employers hired 6.7 million workers for 10.6 million job openings.
Private businesses also added 807,000 new workers in December, according to payroll processor ADP, nearly twice what economists expected.
“807,000 is a great number for private sector jobs, and if you look at the four-week rolling average for new [unemployment insurance] claimants, we haven’t seen those kinds of numbers since 1969,” said Jane Oates, a former Labor Department assistant secretary during the Obama administration, in a Wednesday interview.
“Most people don’t quit a job unless they have a job, so I’m really looking optimistically that we’re going to see a strong number,” she said.
A strong December jobs report could give Biden and Democrats sorely needed good news after weeks of political and policy setbacks.
Biden’s sweeping social services and climate bill is teetering on the brink of collapse after Sen. Joe Manchin (D-W.Va.) announced his opposition to the plan shortly before Christmas. While Biden and Democratic congressional leaders are optimistic they can revive at least some of package, they have put the bill on ice for the foreseeable future.
The omicron spike has also put a dent in Biden’s approval ratings as Americans scramble for COVID-19 tests, parents brace for more school closures and the country grapples with another winter marred by health threats.
A solid jobs gain could help Biden tamp down on some concerns about the strength and pace of the recovery after months of high inflation. Biden and Democrats have struggled to sell the benefits of a roaring recovery in job growth, wages, consumer spending, housing prices and stocks to voters, who’ve focused far more on higher prices and labor shortages rippling through the economy.
High inflation and supply chain snarls have been a pillar of Republican attacks on Biden with less than a year until the midterm elections. GOP lawmakers have blamed rising prices and shortages on Biden’s $1.9 trillion fiscal stimulus bill as they attempt to take control of Congress, though economists say the American Rescue Plan was just one of several causes.
“Nothing strikes fear in the hearts of consumers more than thinking they’re not going to be able to get their fill-in-the-blank,” Oates said. “Whether it’s their Rice Krispies, or whether it’s their toilet paper that makes them very nervous.”
But December’s relief could be fleeting. Many economists fear the U.S has not yet seen the worst of omicron’s impact and remain unsure how it could affect inflation, U.S growth, and the global economy. A potential combination of lower consumer demand and higher pressure on supply chains could leave the U.S. with slowing growth and job gains
“Omicron’s spread has underscored one truism: The health of the economy is ultimately dependent upon the health of the population. The more people who are ill due to COVID, the harder it is to keep the economy operating,” wrote Diane Swonk, chief economist at Grant Thornton, in a Wednesday analysis.
“The spread has been so fast and is affecting so many people that the number of those out sick will be a hurdle to growth in the first quarter. The slowdown could be much more pronounced and broad-based than we saw during the Delta wave over the summer,” she continued.
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