America’s economic recovery is about to go into reverse

America’s economic recovery is about to go into reverse

The Omicron variant put a massive speed bump in the road to America’s recovery this winter. The first signs of trouble could show up in the January jobs report Friday.

The White House on Monday prepared Americans for disappointment about the jobs numbers: Jared Bernstein, a member of the White House Council of Economic Advisers, told CNN the number of jobs added at the start of 2022 could be “unusually low” because of Omicron. The highly infectious variant led millions of workers to call in sick, or in some cases show up to work ill, in the past weeks.

Economists polled by Refinitiv predict 150,000 jobs were added in January. That would make it the worst report since December 2020, when the economy shed jobs. Rising Covid infections were also an issue then. But a closer look at the forecast shows that plenty of analysts anticipate job losses: Goldman Sachs (GS) expects a drop of 250,000, while research consultancy Capital Economics and Jefferies (JEF) predict a loss of 200,000 positions.

On Wednesday, the ADP Employment Report, which tracks private payrolls, showed an unexpected drop of 301,000 jobs last month. Although the ADP and government reports aren’t correlated, it is adding to the worry about what Friday’s tally might look like.