The world’s largest economy created just 199,000 jobs in the last month of the year
Washington:
The US economy ended 2021 on a sour note with a worse-than-expected employment report Friday, underscoring the challenges ahead for President Joe Biden in the new year as the Omicron variant runs rampant and his legislative agenda stalls.
The world’s largest economy gained just 199,000 jobs in the final month of the year, the Labor Department said, defying expectations for an increase of hundreds of thousands of jobs fueled by the Covid-19 recovery.
However, the unemployment rate fell to 3.9 percent, not far from where it was before the pandemic hit, and Biden hailed the report as “an historic day for our economic recovery.”
Analysts warn that the coming days could nevertheless turn darker as Covid cases caused by the new variant increase and complicate daily life again.
“All of this is for Omicron, which is sickening a lot of people and disrupting a lot of businesses,” tweeted Mark Zandi of Moody’s Analytics, noting that the study was based on data collected before the recent spike in infections.
“Companies are getting better at managing the waves, but the pandemic is still in control of the economy.”
The data was the latest blow to Biden after his Build Back Better spending plan, called Build Back Better, was suspended in Congress over opposition from a key lawmaker in his Democratic Party.
The Republican opposition in the Senate, meanwhile, tweeted that the report marks “another huge miss for Biden’s economy.”
The recent surge in inflation has undermined public support for Biden, but the most powerful player against it is not the White House, but the Federal Reserve.
Analysts say there was enough good news in this report for the independent central bank to move closer to a rate hike as early as March, but the expected damage from Omicron could complicate the situation.
“In the context of a rapidly deteriorating health situation, the (first quarter) slowdown in economic activity will force Fed Chair (Jerome) Powell to walk a tightrope in upcoming policy meetings,” said Gregory Daco of Oxford Economics.
Differences get bigger
The United States added an average of 537,000 jobs per month last year for a total of 6.4 million, while the decline in the unemployment rate also brought it close to the 3.5 percent level of February 2020, before the economy collapsed.
A separate household survey by the Department of Labor found that the number of people in work rose by 651,000 in December, a sign that the report may have been stronger than its headline suggests.
“Last year ended with fewer new job creations than expected, but the main salary number really shouldn’t be the center of attention,” said economist Joel Naroff.
“Available labor is the problem that companies face and it continues to disappear.”
The government also revised employment gains for October and November upward, saying they were combined 141,000 jobs higher than previously reported.
But as companies continue to struggle to fill vacancies, the employment rate, a closely watched measure of people working or looking for a job, remained unchanged at 61.9 percent last month, after the best part of last year. spent inactive.
And the differences between racial groups persisted, with the unemployment rate for African Americans rising 0.6 points to 7.1 percent, while the rate for white Americans fell.
pay up
Biden managed to pass two major spending bills last year to fight the pandemic and upgrade the country’s infrastructure, but was less successful in countering the wave of price hikes.
Economists debate the factors responsible for inflation, including the role that salaries have played. Employment data showed that the average hourly wage increased by 4.7 percent from 2021, not far from the inflation rate.
The Fed has already indicated it is ready to hike rates, possibly up to three times by 2022, which could tame the price spike.
The report “will not change the Fed’s stance, but they give us more confidence in our forecast that the first rate hike will come in March,” said Ian Shepherdson of Pantheon Macroeconomics.
