Overall, the report indicated that the labor market remained solid. Consumer spending and corporate purchases of machinery and equipment have likely propelled the economy to robust annual growth of around 7 percent in the last three months of 2021. American confidence in the economy rose slightly in December, according to the Conference Board, suggesting spending likely remained healthy through the end of the year.
The data for the job report reflects the state of the economy in early December before the spike in Covid infections started to disrupt the economy late last month. Omicron has made millions of Americans sick and forced airlines to Cancel thousands of flights, reduced traffic in restaurants and bars and closed some key school systems, potentially leaving some parents at home with their children and unable to work.
The aftermath of the pandemic has made the government’s survey of corporate payrolls more volatile, with one month’s data often followed by an entirely different trend a month or two later. On Friday, for example, the November job gain was revised from 210,000 to 249,000, and October’s gain, originally reported at 531,000, was raised to a whopping 648,000.
The economy has also shown resilience to rising inflation, the prospect of higher lending rates, and the proliferation of the Omicron variant. Most companies report constant demand from their customers despite chronic delivery bottlenecks.
Despite the modest increase in December, 2021 was one of the best years for American workers in decades, though it followed in 2020, the worst year in the labor market since records began in 1939, a result of the pandemic recession. Companies posted a record number of vacancies in the past year and offered significantly higher wages to find and retain workers. Americans responded by quitting their jobs in droves, mainly because of better pay with other employers.
Economists have warned that employment growth could slow in January and possibly February as the number of new Omicron infections has increased, forcing millions of newly infected workers to stay home and quarantine what employers are from Ski areas to Airlines to Hospitals.
Alaska Airlines said it had 10 percent of its flights in January because of one “Unprecedented” number of employees who call in sick. However, because Omicron is less virulent than previous Covid-19 variants and few states or locations have moved to curtail business operations, economists believe its economic impact will be short-lived.
Still, Andrew Hunter, an economist at Capital Economics, a forecasting firm, calculates that up to 5 million people – about 2 percent of the American workforce – could be stuck at home with Covid for the next week or so. Unemployed workers who miss a paycheck are classified as unemployed by the government. In the January employment report due out next month, such a trend could slow employment gains significantly.
Omicron is also likely to weigh on restaurant and bar jobs. The number of Americans ready to eat in restaurants began to decline in late December, according to reservations website OpenTable. Restaurant traffic was near pre-pandemic levels for much of November, but had fallen nearly 25 percent below that level by December 30, based on a weekly average of OpenTable data.
Other economic policies have mostly reflected a resilient economy. A survey of manufacturing purchasing managers found that factory output grew at a healthy pace in December, albeit at a slower pace than in previous months. Rent also picked up. This is what car dealers report Demand for new cars remains strong, with sales slowed by the scarcity of semiconductor chips, which has hampered auto production.