White House warns that January's omicron spike could weigh on next week's jobs data

3 months ago

White House nationalist economical manager Brian Deese speaks during a property briefing astatine the White House successful Washington, U.S., July 2, 2021.

Kevin Lamarque | Reuters

The White House connected Friday warned that the omicron-fueled spike successful Covid-19 cases successful aboriginal January could skew the information successful adjacent week's jobs report, arsenic millions of Americans near enactment owed to unwellness oregon to attraction for household members.

Brian Deese, President Joe Biden's apical economical advisor, told CNBC connected Friday that the mode the Labor Department collects employment information whitethorn person a pronounced effect connected the January 2022 information and suggest a greater fig of unemployed.

"The mode that the authorities samples the information is to instrumentality a snapshot successful an idiosyncratic week," Deese, the manager of the National Economic Council, said an interrogation connected "Closing Bell."

"And if idiosyncratic is retired sick for that week — adjacent if they person not been laid off, if they weren't paid getting paid sick permission — they volition not beryllium counted arsenic employed," helium added. Americans "need to beryllium prepared for January employment information that could look a small strange."

Deese's comments underscored the uncertainty astir this month's employment picture. Economists polled by Dow Jones are expecting a summation of astir 200,000 jobs for January, though immoderate analysts connected Wall Street are expecting a loss.

The White House does not get entree to delicate economical data, including the monthly jobs report, until the time earlier it's released. The information is provided to the Council of Economic Advisers, which often shares it with the president.

But Deese and the unit astatine the NEC are apt doing investigation of their ain up of the Labor Department's release. If the Bureau of Labor Statistics happened to survey Americans connected their employment presumption during the highest days of the omicron variant infections, humanities information suggests that January's nett alteration successful payrolls could autumn abbreviated of expectations oregon adjacent decline.

"If you deliberation astir omicron successful aboriginal January, and the interaction it was having successful presumption of the fig of radical who were retired sick, we bash expect determination to beryllium immoderate existent saltation successful the data," Deese said.

Data already disposable to the nationalist whitethorn suggest a pugnacious period for the jobs report.

The results of the U.S. Census Bureau Household Pulse Survey that was published past week showed that more than 14 cardinal Americans did not work astatine immoderate constituent betwixt Dec. 29 and Jan. 10 due to the fact that they had Covid, oregon were caring for idiosyncratic with the virus, oregon for a kid who did not spell to schoolhouse oregon daycare.

"This is treble the fig not moving owed to COVID unwellness successful the Census survey done successful aboriginal December, and connected par with the highest fig successful the worst of the pandemic this clip past year," Mark Zandi, main economist astatine Moody's Analytics, wrote successful a societal media station dated Jan. 21.

"With truthful galore workers out, likelihood are precocious that the BLS volition study employment declined successful January. The BLS survey play utilized to estimation jobs for the period overlaps with the Census survey," helium added.

Those warnings travel arsenic a fig of Wall Street economists accidental they expect the January information to beryllium weaker than successful anterior months.

"We reckon that erstwhile the information person been revised implicit the adjacent fewer weeks, up of the authoritative merchandise connected February 4, they volition beryllium accordant with backstage payrolls falling by astir 300K," Ian Shepherdson, main economist of Pantheon Macroeconomics, wrote connected Jan. 20. "That said, it's important to admit that the borderline of mistake successful each payroll forecasts close present is huge."

The lingering pandemic makes the occupation of collecting reliable employment numbers much hard — and less reflective of the last number aft revisions than successful pre-pandemic times. The Labor Department has implicit the past 2 years has tended to contented larger-than-normal revisions to the preliminary employment data.

The pandemic has besides made Wall Street forecasters' occupation much hard and eroded the worth of precocious expectations. As of Friday, economists polled by Dow Jones expect the U.S. system to person added 199,000 jobs successful January, portion Wells Fargo expects a nett diminution of 100,000 payrolls. Nomura thinks the diminution volition beryllium astir 50,000 jobs.

"Omicron has weighed heavy connected labour proviso this month, due to the fact that of quarantining workers. We spot beardown downside risks to January payrolls," Bank of America economist Aditya Bhave wrote connected Tuesday. "We enactment that much than fractional of those who did not enactment due to the fact that they were caring for idiosyncratic oregon sick with Covid person a precocious schoolhouse grade oregon less. Since these individuals are much apt to beryllium wage workers, determination are meaningful downside risks to January nonfarm payrolls."

The upside for Wall Street and Washington is that February could beryllium a beardown jobs period if those who were marked arsenic unemployed successful January instrumentality to work.

"The Omicron daze is apt to beryllium short-lived," Bhave added. "The summation successful those who are not moving due to the fact that of concerns astir getting oregon spreading Covid has been precise humble comparative to the size of the wave. This suggests that headwind to labour proviso from the fearfulness of Covid is mostly fading."

CNBC's Michael Bloom, Nate Rattner and Steve Liesman contributed to this report.