The surprisingly strong new employment numbers released Friday are a sign the economy might be moving beyond the shackles of the pandemic and that more people are willing to live their lives as they did before COVID-19 hit.
For nearly two years, surges in COVID-19 have corresponded with slowdowns in commerce. However, the massive increase in infections and sickness caused by the omicron variant caused much less disruption — not enough to slow the jobs recovery severely.
The economy defied expectations in January by adding 467,000 jobs despite top forecasters fearing outright losses. Additionally, November and December’s less-than-stellar reports were revised up by an enormous margin — 710,000 more jobs.
“January 2022 will be remembered as the month the virus ceased to be boss,” trumpeted Harvard economist Jake Furman.
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“It wreaked havoc & death at a terrible scale. But the economy no longer cares. People returned to the workforce. The economy added jobs. Wages rose. You would barely know it happened from the economic data,” tweeted Furman, who was also chairman of President Barack Obama’s Council of Economic Advisers.
Notably, the sectors most vulnerable to pandemic disruptions fared well in January. Restaurants and bars, for instance, added 108,000 jobs in the month despite getting hammered in earlier stages of the pandemic as people opted not to mingle in public places. Retail employment also grew steadily in December and January.
To be clear, the effects of the pandemic were apparent in Friday’s data. A record 3.6 million people were kept home from work because of illness, about four times as many as was typical prepandemic. Another 1.8 million said they weren’t even looking for work because of the pandemic, up 700,000 from the month before.
Still, the economy as a whole was able to absorb the hit from omicron and keep expanding.
“Everyone was expecting poor numbers, even negative numbers, and it was certainly not that,” Mo Cayer, program coordinator for the master’s program in human resources at the University of New Haven, told the Washington Examiner.
The numbers are particularly surprising in light of how prevalent omicron’s January spike was. While new cases averaged under 100,000 per day in early December, they skyrocketed to more than 800,000 in mid-January — far eclipsing other spikes like that of the delta variant over the summer.
Nick Bunker, Indeed Hiring Lab’s director of research, explained that while omicron affected day-to-day life in January, the labor market appears to be steeling its resolve against new iterations of the virus.
“As we have seen in the past, the economic fallout from each successive wave of the pandemic has been smaller and smaller. This trend, along with strong demand for workers suggests 2022 could be a year with continued strong gains for the labor market,” Bunker said.
Cayer noted the seasonal adjustments the Labor Department applies to the jobs numbers could have overstated the gains.
“We’ll see next month if the seasonal adjustments that they applied were an overshoot and [if] the February jobs numbers come out less positive,” Cayer said.
Further bolstering Friday’s positive economic news is that Thursday’s jobless claims report, which highlights those who applied for unemployment benefits during the last week of January, was also better than anticipated.
The Federal Reserve is among those eyeing this week’s employment numbers like a hawk, and the positive news will lend further credibility to the more hawkish turn it has made in recent weeks. The Fed is looking to hike interest rates soon, likely in March, and then push up the federal funds rate several more times this year to combat inflation, which has been exploding over the past year.
The better-than-forecast job numbers will make it difficult for fans of the central bank taking a more dovish monetary policy to argue the economy still needs to improve before interest rates are hiked.
The central bank will now be even more laser-focused on tamping down inflation, which has surged to 7% for the past year in the Consumer Price Index.
After the last meeting of the Federal Open Market Committee last month, Fed Chairman Jerome Powell said improvements in labor market conditions have been “widespread.” He said he personally sees the United States at full employment.
“Most FOMC participants agree that labor market conditions are consistent with maximum employment,” he said.
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The White House was quick to tout the new employment numbers on Friday after spending the week trying to preempt a bad report and prepare for negative news on the jobs front.
“Our country is taking everything that COVID is throwing at us, and we’ve come back stronger,” said President Joe Biden. “These announcements are the drumbeat of a jobs resurgence unlike anything we’ve seen in our history.”
