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‘Employers were barely sneezing at Omicron’: A surprisingly strong jobs report boosts Biden

“Demand for labor remains incredibly strong,” said Julia Pollak, chief labor economist at online job site ZipRecruiter.FREDERIC J. BROWN/AFP via Getty Images

WASHINGTON — The US economy appears to have weathered the biggest COVID surge yet, fighting through record case counts to produce surprisingly strong job growth last month.

The nation added 467,000 jobs in January despite disruption caused by the Omicron variant, the Labor Department reported Friday, providing a political boost to President Biden and likely clearing the way for the Federal Reserve to focus all its firepower on containing rapidly rising inflation.

Record COVID case counts last month had been expected to slow hiring significantly, with some economists even forecasting a decline after a seemingly lackluster December. But new data released Friday also showed that job growth was much stronger at the end of last year than initially reported, with December’s figure revised up sharply to 510,000.


The momentum continued into January as a resilient and highly competitive job market proved largely immune to the resurgent virus. The unemployment rate ticked up to 4 percent, but that was because the labor force grew as more people came off the sidelines to look for work.

“It clearly had an effect, yet as this Omicron wave surged it was quite clear in our marketplace and jobless claims and other data that employers were barely sneezing at Omicron,” said Julia Pollak, chief labor economist at online job site ZipRecruiter.

“Demand for labor remains incredibly strong,” she said. “Employers were in no way pulling job postings down or running for the hills. They are locked in a war for talent and they were not prepared to stand down.”

January’s job growth was broad based. It was led by a gain of 151,000 jobs in leisure and hospitality businesses, which had been expected to take a hit after Omicron scrambled plans to travel or go out to restaurants and bars. Wage growth also was strong, with average hourly earnings up 5.7 percent from a year earlier.


But that pay increase wasn’t enough to keep up with inflation. The consumer price index increased 7 percent last year, the fastest pace in decades and a key factor in Americans’ low approval ratings on the economy and Biden’s handling of it.

Still, Friday’s report was cause for relief and celebration at the White House, which had been bracing for disappointment. Biden’s economic aides had been warning of discouraging January job growth because the Omicron wave peaked during the period in the middle of the month when the Labor Department gathered its data. Instead, they got a strong January figure and revised numbers from last year that added 709,000 more jobs combined for November and December.

“America’s job machine is going stronger than ever,” Biden said at the White House, touting January gains, the record 6.6 million jobs created in 2021, and overall economic growth last year that was the best since 1984. “I’m proud of the role the administration played and this economic plan has played in the recovery.”

He acknowledged there was “still a lot of work to do,” including the need to ease the burden of higher gas and food prices, as well as continue fighting the pandemic.

“I know that January was a very hard month for many Americans. I know that after almost two years the physical and emotional weight of the pandemic has been incredibly difficult to bear for so many people,” Biden said. “But here’s the good news: we have the tools to save lives, and to keep businesses open and keep schools open, keep workers on the job, and sustain this historic economic comeback.”


Republicans had pounced on the initial report on hiring for December showing job growth of 199,000 to argue that Biden’s economic policies were failing. But they had trouble finding flaws in January’s jobs report. The Republican National Committee resorted to tweeting that Republican governors led 16 of the top 20 states in recovering jobs lost by COVID.

Omicron still had an impact last month. The Labor Department said 3.6 million workers missed time in January because of illness, more than triple the usual January level. And economists expect the variant will slow overall economic growth in the first three months of the year.

But they also echoed Biden’s upbeat assessment of the job market.

A report from Bank of America’s global research team declared it was a “good time to ask for a raise.” Brian Coulton, chief economist at credit rating firm Fitch Ratings, said the January report “confirms that each successive wave of the virus is having a smaller and smaller impact” on the economy and jobs. And Chris Rupkey, chief economist at FWDBONDS, a financial markets research company, pronounced the labor market back to its pre-pandemic strength, even though the United States remains about 2.9 million jobs short of its February 2020 peak.

“The labor market didn’t hit a wall in January and instead is growing by leaps and bounds,” Rupkey said. “There’s only one fight to be had now and that’s the fight against inflation, which is raging out of control.”


The Fed already has turned its attention in that direction, beginning to pull back some of its support for the economy and signaling it will begin raising its benchmark interest rate in March to try to slow down price growth. Fed officials indicated in December that they expected three small quarter percentage point increases this year, lifting the rate from near zero to close to 1 percent.

Analysts said Friday’s report could cause the Fed to be more aggressive on interest rates, possibly raising the rate by half a percentage point in March and ultimately pushing it closer to 2 percent by the end of the year. Fed Chair Jerome Powell said last month that he and his colleagues would watch incoming data and be “nimble” in response.

Fed officials have a two-part mandate: achieving maximum employment and stable prices. After January’s jobs report, Rupkey believes they’ve achieved the first goal.

“At this point, their laser focus should be on inflation and no longer the labor market,” he said.

Powell said in January that the United States had a “very, very strong labor market” and that he thought the Fed could hike rates without “severely undermining it.” But raising interest rates risks pushing the economy into a recession.

Even with strong job creation and a low unemployment rate, Pollak thinks the Fed will proceed cautiously in hopes of maintaining the labor market momentum.


“They have been very concerned about employment,” she said. “They’re going to balance the two issues and I think we could get to a situation where we get to a goldilocks economy — not too cold like 2020, not too hot like 2021, but just right with a sustainable pace of job growth.”

Jim Puzzanghera can be reached at Follow him @JimPuzzanghera.