Forecasters say employers are still hiring despite the Omicron variant’s expected impact on economic growth
The report comes as forecasters are lowering their estimates of economic growth amid rising coronavirus cases that have prompted some consumers to stay home and some businesses to close temporarily.
“Businesses know on the other side of the wave, their biggest problem is getting workers,” said Mark Zandi, chief economist at Moody’s Analytics. From 5.2% the annual rate due to Omicron.
Mr. Zandi pointed to an earlier experience of the delta version of COVID-19 that gripped the US in the summer: it slowed third-quarter economic growth, but had a relatively small impact on hiring.
Labor market strength, coupled with rapidly rising inflation, will be crucial to Federal Reserve policymakers’ discussions about when and how much to raise short-term interest rates from near zero.
In mid-December, the Fed set the stage for interest rate hikes to begin in the spring, with most central bank officials talking about the prospect of inflation with at least three quarter-percentage-point rate hikes in 2022. To stay at a high level amidst anxiety.
Central bankers worry that instead of just threatening to curtail economic growth, a rise in Covid-19 cases could also lead to higher inflation adding to supply constraints. But data from South Africa and the UK suggest Omicron may cause less severe disease than previous strains, leading some economists to expect the current wave of infections to peak in the early weeks of the year.
Fed officials are not expected to raise interest rates at their next policy meeting on January 25-26. But some economists and investors feel that policy makers may consider raising borrowing costs only with their next meeting in March.
“As long as the Fed sits in mid-March, hopefully” [the Omicron surge] Pantheon Macroeconomics chief economist Ian Shepherdson said the end would be over, with central bank officials “looking forward, not backward.”
Workers in the US are leaving jobs at record rates, leaving roles for better working conditions and pay. Employees resigned from 4.2 million jobs in October, slightly off September’s record of 4.4 million job losses.
This has left employers struggling to find and retain employees. A December survey of business executives The most commonly cited factors are difficulties withholding revenue from firms, absenteeism and labor shortages due to COVID-19 infection or quarantine, found by the Federal Reserve Bank of Dallas. Around 45.8% of the respondents cited staff shortage as a major restraint on sales from 21.4% in July 2020.
Debra A. Johnson, CEO of the Denver Metro-Area Transit System-Regional Transportation District, said the labor shortage is particularly acute because many workers are now seeking remote work and the flexibility that many front-line positions don’t offer. Huh.
“The whole world seems under-employed,” she said. RTD began offering hiring bonuses of $4,000 for the first time in November for jobs such as bus operators, engineers and mechanics, as well as referrals and other bonuses for some employees. She expects a “more attractive market” for new employees once the impact of government subsidies subsides, but said there’s still “tons of uncertainty.”
Economists studying Friday’s employment report will note that more people are working or looking for jobs after months of school closures and government aid. recently survey by job site found that the main factors preventing unemployed workers from seeking immediate jobs were employed partners, caring responsibilities and financial cushion.
Economists say businesses and workers are slowly learning to live with the pandemic’s successive waves, each hurting slightly less than the last. In addition, new government incentives and increased unemployment benefits appear unlikely, which could prompt more workers to rejoin the labor force.
Joshua Shapiro, an economist at the advisory firm Maria Fiorini Ramirez Inc., said “there is little appetite for shutdowns and drastic measures” among politicians and the general public, adding that “people are starting to say enough is enough.”
Write Harriet Tory at [email protected]