The US job market ends 2021 with mixed signs

With a disappointing level of job creation in December and at the same time a sharp drop in unemployment, the US job market ended 2021 on a mixed note, reflecting the challenges that await President Joe Biden this year. of midterm elections.

The world’s largest economy created just 199,000 jobs in the final month of 2021, far from the 440,000 analysts expected, while the labor market participation rate was unchanged, at just 61.9%.

These figures are even more disappointing given that the data was collected before the omicron variant of COVID-19 spread across the country like wildfire, causing theaters, cinemas, restaurants, factories and even schools to close and imposing quarantines hundreds of thousands of people per day.

However, concomitantly, the unemployment rate continued to decline at the end of last year, more than expected, falling to 3.9% (-0.3 percentage points), thus approaching its pre-pandemic level (3.5%).

A negative note in this regard is that unemployment affects more blacks (7.1%) and Hispanics (4.9%).

Biden, who has made job growth and reducing inequality a priority, was due to comment on this data by local mid-morning on Friday.

For the US president, recovering full employment and controlling inflation, which has skyrocketed for months, is essential in this election year, when his economic policy is under fire from criticism from the opposition and even within his own field. democrat.

“The December jobs report is the worst of Joe Biden’s presidency and just the latest sign that his economic crisis continues,” said Republicans in the House of Representatives.

“Sheer clumsiness. This is the only explanation for the employment figures under the Biden administration. (…) Joe Biden’s failed socialist agenda is killing the American economy, ”Republican Sen. Rick Scott tweeted.

For White House economic adviser Brian Deese, instead, “there are millions of American families and workers whose lives are better thanks to the historically strong economic recovery of 2021.”

All eyes are now on the Central Bank, whose officials appear determined to tackle rising prices by raising interest rates as soon as possible, at the risk of slowing growth and thus employment.

“In the context of a rapidly deteriorating health situation, the pause in economic activity in the first quarter will force Fed Chairman (Jerome) Powell to walk a tightrope at future meetings,” summarized Gregory Daco, economist at Oxford Economics.

The United States currently has more than 550,000 new COVID cases per day, according to estimates by the CDC, the main public health agency. And in the week ending January 1, omicron accounted for 95% of new cases.

This variant is less fatal than the previous ones, but much more contagious, and the wave of infections seriously compromises the return to work, especially of women, forced to stay with their children.

Imbalance

“All of this highlights that the performance of the economy remains closely linked to the waves of the pandemic,” tweeted Mark Zandi of Moody’s Analytics, noting that companies were increasingly handling the waves of infection.

Last year was marked by a profound imbalance between the very high supply of jobs, particularly low-paying jobs, and the demand, as the pandemic markedly changed the aspirations of American workers.

This trend is expected to continue at least in the first months of the year.

A phenomenon called “The great resignation”, marked by massive resignations of workers, generally unskilled, has been underway since the boreal spring.

In November, some 4.5 million people left their jobs, a record, according to data from the Bureau of Statistics.

For employers, the labor market has thus become a headache.

In order to attract candidates, they increased salaries and multiplied bonuses and benefits: in 2021, the average hourly wage increased by 4.7%, a level insufficient to compensate for the rise in consumer prices.