White House braces for weak jobs report after Omicron surge coincides with data collection

By Phil Mattingly, CNN

White House officials are bracing for an unusually weak January jobs report due to Omicron cases peaking at the same time the monthly employment survey data was collected.

Several of President Joe Biden’s top economic officials have warned that the January jobs report, set for release on Friday, is likely to show an “unusually low” level of job gains, or even net losses, tied to high numbers of sick people who called out of work.

“It turns out that the peak of Omicron cases coincided with when the payroll data was being collected,” Jared Bernstein, a member of Biden’s Council of Economic Advisers, said Monday in an interview on “CNN Newsroom.” “If you were not at work, if you were on unpaid leave, you’re not counted as being on payroll.”

The January jobs report will mark the first of the year for an administration that boasted record single-year job growth in its first year, along with an unemployment rate that dropped to 3.9%, from 6.7%, over the course of the 12-month period.

For Biden, the job gains have served as a critical marker of success in the economic recovery from the peak of the pandemic-induced economic collapse. Even as inflation — driven by Covid-related supply chain bottlenecks and consumer demand shocks — hit nearly four-decade highs, the robust job gains have been regularly touted by Biden and his top advisers as evidence of an economy that has bounced back from crisis more quickly than that of any other country in the world.

“We learned this week, after my first year as President, the United States had the fastest economic growth in nearly four decades, along with the greatest year of job growth in American history: 6.4 million jobs created in one year,” Biden said during remarks last week in Pittsburgh.

While White House officials have cautioned they don’t know exactly where the numbers will land, they have made clear that the timeline in which the data was collected is likely to lead to “a number that’s a little confusing,” Brian Deese, Biden’s top economic adviser, said on MSNBC this week.

Biden’s economic team has closely monitored the economic effects of the recent Omicron surge, which blanketed the country over the last eight weeks, for warning signs of significant disruption.

For the most part, there is a sense inside the White House that the US economy, bolstered by vaccines and treatment options that weren’t available at the height of the pandemic in 2020, has weathered the storm, even as acute concerns about new Omicron-driven supply chain issues have remained top of mind.

But over this week, officials have made clear they expect the jobs numbers to take a hit, in large part due to when the data was collected in January.

“Because Omicron was so highly transmissible, nearly 9 million people called out sick in early January, when the jobs data was being collected,” White House press secretary Jen Psaki told reporters this week. “So during that same period of time, in the week the survey was taken, the week of January 12, was at the height of the Omicron spike.”

For Biden, who is scheduled to address the jobs report on Friday morning, a low or negative number will likely bring near-term political criticism as public opinion about his handling of the economy continues to sink.

Officials have made clear they believe that will be unwarranted, and they underscored their view that unusual convergence in the peaking cases and data collection shouldn’t be seen as the start of a broader trend.

“We never put too much weight on any individual month,” said Deese, the National Economic Council chairman. “This will particularly be true in this month, because of the likely effect of the short-term absences from Omicron.”

It’s a view that appeared to be bolstered by first-time unemployment claims that dropped last week for the first time in a month, a signal that Omicron-driven disruptions may be starting to ease.

That number came as Covid cases have started to drop dramatically, particularly in regions hardest hit by Omicron, and the weeks-long wave starts to subside.

“The key point, from our perspective, is the underlying strength of the economy, the underlying strength of the job market, is ongoing because as we have seen, the caseloads are turning over,” Bernstein said.

For that White House, that means a clear effort to lay the groundwork in advance of the Friday report.

“We just wanted to kind of prepare, you know, people to understand how the data is taken,” Psaki said. “As a result, the month’s jobs report may show job losses in large part because workers were out sick from Omicron.”

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