Government data on Friday is expected to show that the economic recovery marched steadily forward last month — though appearances may be deceiving.
Economists polled by Bloomberg expect the Labor Department’s December employment report to show a gain of about 440,000 jobs, a healthy number that would signal a rebound from the previous month. In November, employers added only 210,000 jobs, the year’s weakest hiring, though some economists expect those numbers to be revised upward in Friday’s report.
The report is expected to show that unemployment fell by one-tenth of a percentage point in December, to 4.1 percent.
Should those numbers bear out, it would set the tone heading into a crucial midterm election year and would almost certainly be hailed by Democrats as evidence that their economic policies are succeeding.
But Friday’s report will come with an important caveat: The data was collected in mid-December, before the pandemic’s latest wave revealed its strength. Since then, the Omicron variant has ignited a steep rise in coronavirus cases, driving up hospitalizations, keeping people home from work and prompting fresh uncertainty among employers across the country. Economists are bracing for the surge in cases to curtail job growth in January and in the coming months, though it is too soon to say how it will affect the labor market in the longer term.
“There was strong momentum in the labor market heading into this Omicron wave,” said Julia Pollak, the chief economist at ZipRecruiter, an online employment marketplace. But she added that the variant was “likely to cause substantial disruption in January.”
“All we can hope is that disruption is short-lived, because Omicron does tend to be a variant that results in shorter hospitalizations,” she said.
The seesawing employment situation underscores the economy’s continued susceptibility to the pandemic, nearly two years on. Although the labor market has brightened, some industries with face-to-face interactions, notably leisure and hospitality, remain extraordinarily vulnerable to case levels.
Many businesses have postponed return-to-office plans, sometimes indefinitely. Restaurants and theaters have increasingly gone dark amid staffing shortages and renewed fears of infection. Some school districts have returned to remote learning, or are threatening to, leaving many working parents in limbo.
“We’re all sort of at the whims of these variants and surges in cases, and it’s hard to know when they might strike,” said Nick Bunker, director of economic research at the Indeed Hiring Lab. “Any sort of projections or outlook on the pace of gains over the next year or so is still dependent on the virus.”
