It was a major disappointment: Economists had forecast job growth at twice that number.
Wells Fargo economist Sarah House said, “We just have to admit that this is still such an unusual time. It’s hard to tell at the best of times.”
A lot of the models used by economists are not optimized to capture labor shortages, for example, she told CNN Business.
But the diminished gains send a clear message. Recovery is still not complete.
year of trial
The unemployment rate fell to 3.9% in December, marking a new pandemic-era low. At the same time, the labor force participation rate was unchanged from November at 61.9%, yet 1.5 percentage points lower than in February 2020.
The unemployment rate for white, Asian and Hispanic workers fell in December, while unemployment for black workers rose.
At the end of the year in February 2020, the nation was still down by 3.6 million jobs, compared to before the pandemic.
Wells Fargo economist House said, “We’ve made massive inroads to address the job shortage … If you look at the overall state of the labor market, it’s impressive.”
In a sense, even the labor shortage, which is affecting businesses, is a relatively good problem, she said: “It’s in stark contrast to the two years of that Great Recession.”
To be sure, 2020 was also a year of unprecedented job gains. But due to heavy losses at the start of the pandemic, the economy recorded a net loss of jobs that year.
But because the surveys on which the jobs report is based are conducted in the middle of the month, the December report has not yet reflected the Omicron effect. In January it will be different.
“I think Omicron is definitely going to have a big headwind for January. But I also think you’ll have seasonal tailwinds: January is [traditionally] Biggest month for layoffs, but because businesses have had such a hard time getting workers, you won’t see “layoffs” this year, House said.
Winners and Losers in December
The leisure and hospitality industry gained jobs with a modest 53,000 pairs, but the industry remains below 1.2 million positions compared to pre-pandemic times.
Professional and business services, manufacturing, construction and transportation and warehousing also added jobs last month.
Meanwhile, retail — which usually adds a lot of jobs that go into the holiday period — showed a seasonally adjusted decline. That’s because even though the sector may have actually hired more workers, the seasonal adjustment is based on the much larger gains historically seen at this time of year.
With the rise in warehousing and logistics jobs, these trends reflect how much consumer behavior has shifted online during the pandemic. And with a risk from Omicron, online shopping likely won’t be out of fashion any time soon.