The January jobs report is coming at a pivotal time for the US economy. Inflation is on the rise. The pandemic is still ongoing. And the Federal Reserve is trying to decide how best to steer the economy through the spiral of competitive threats.
Unfortunately, the data, which the Labor Department will release on Friday, is unlikely to provide a clear guide.
An odd array of measurement and data issues will make it difficult to gauge exactly how the latest wave of coronavirus has affected workers and businesses, or to gauge the underlying health of the market. labor.
“It’s going to be a mess,” said Skanda Amarnath, chief executive officer of Employ America, a research group.
The data for the report was collected in mid-January, near the peak of the wave of cases related to the Omicron variant. There’s no doubting an increase in disrupted cases: A Census Bureau survey estimated that more than 14 million people in late December and early January were out of work because they had Covid- 19 or caring for someone, more than at any other point during the pandemic.
Understanding inflation in the US
But exactly how those disruptions will affect the amount of work is less certain. Forecasters surveyed by Bloomberg expect the report to show that employers added 150,000 jobs in January, only modestly less than the 199,000 jobs added in December. But there is an unusually wide range of estimates, from a gain of 250,000 jobs to a loss of 400,000.
The Biden administration and its allies are preparing for a grim report, warning on Twitter and in conversations with reporters that a weak January job number was not necessarily a sign of continued decline.
Economists generally agree. Coronavirus cases have begun to decline in most countries, and so far there is little evidence that the latest wave causes lasting economic damage. The number of layoffs did not spike, as happened earlier during the pandemic and employers continued Post job opportunities.
“You can potentially have a salary figure that looks really awful, but you’re pulling the rubber band,” said Nick Bunker, the job site’s director of economic research. “Things can come back really quickly.”
However, the January data will be unusually confusing as the impact of Omicron will affect different details in different ways.
Two employment measures
The most commonly noticed number, the number of jobs gained or lost, is based on a government survey that asked thousands of employers how many employees they had on their payroll over a period of time. certain pay period. People who are out of work – because they are sick, are quarantined for exposure to the coronavirus, or are looking after children because their daycare arrangements have been cancelled – may not be counted, even though they no job loss.
It is difficult to predict the impact of such absences on employment numbers. The pay figure is meant to include anyone who worked even an hour during the pay period, so people who took only a few days off work would still be counted. Paid leave is also counted. However, the sheer scale of the Omicron wave means the absence will almost certainly come at a cost.
The jobs report also includes data from a separate survey of households. That survey considers people “employed” if they report having a job, even if they are sick or absent for other reasons. The different definitions mean that the report can send conflicting signals, with one measure showing an increase in employment and a decrease in the other.
Frequently asked questions about inflation
What is inflation? Inflation is a Loss of purchasing power over time, which means your dollar won’t go as far tomorrow as it did today. It is usually expressed as an annual change in prices for everyday goods and services such as food, furniture, clothing, transportation, and toys.
Economists are generally more interested in surveys of businesses, which are larger and considered more reliable. But some say they will pay more attention than usual this month to data from the survey of households, because it will help better distinguish between temporary absences and long-term effects. more from Omicron, such as layoffs or deferrals.
However, economists also warn against minimizing the impact that even temporary work breaks can have on families and the economy, especially now that the government is no longer extending subsidies. unemployment and other aid payments.
“There aren’t many Covid relief funds coming out any longer, so the layoffs could actually reflect a significant drop in earnings,” said Julia Pollak, chief economist at job site ZipRecruiter. “.
Even in normal times, the January jobs data can be difficult to interpret. Retailers, shippers and other companies annually lay off hundreds of thousands of temporary workers hired during the holiday. Government statisticians tweak the data to account for those seasonal patterns, but that process is far from perfect. January is also the month each year the Labor Department incorporates long-term revisions and other updates into its estimates.
“January is a messy month,” said Mr. Amarnath.
This year, things are likely to get more messy as the pandemic has disrupted normal seasonal patterns. The shortage of labor forces some companies to hire permanent workers instead of short-term seasonal workers during the holidays; others may have kept temporary workers longer than intended to cover sick employees. If that results in fewer layoffs than usual, the government’s seasonally adjusted formula would explain that employment continues to be on the rise.
Other numbers can also be deceptive. For example, the unemployment rate could fall even as hiring slows. That’s because the government considers people unemployed only if they are actively looking for work, and the spike in Covid cases may have prompted some to suspend their job search.
The data on average hourly earnings can also be skewed because it is based on payroll data – those not on the payroll are not included in the average at all. Low-wage workers were probably the ones most likely to have a pay shortfall last month, as higher-wage workers were more likely to get paid sick leave. That could lead to an artificially inflated median earnings — and temporarily — as policymakers at the Fed are looking at wages data for hints about inflation.
https://www.nytimes.com/2022/02/03/business/economy/jobs-report-covid-omicron.html January work report May be disappointing. It’s sure to be confusing.