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White House warns that January’s omicron spike could weigh on next week’s jobs data

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Brian Deese, White House National Economic Director, speaks at a briefing held by the White House, Washington, U.S.A, on July 2, 2021.

Kevin Lamarque | Reuters

Friday’s White House warning came from the White House. It warned that Covid-19 spikes caused by omicrons in January may have skew next week’s data report. Millions of Americans are sick or caring for their family.

CNBC’s top economist advisor to President Joe Biden, Brian Deese said that the Labor Department may be having a more pronounced impact on January 2022 employment data. This could lead to a higher number of people unemployed.

Deese said that “the way the government samples data is to take snapshots in an individual week.” He was speaking on “Closing Bell”

“And if somebody is out sick for that week — even if they have not been laid off, if they weren’t paid getting paid sick leave — they will not be counted as employed,” he added. Americans need to prepare for unexpected January employment data.

Deese commented on the uncertain employment outlook for January. Dow Jones polled economists and they expect a gain in January employment, but some Wall Street analysts are anticipating a decrease.

The White House doesn’t have access to any sensitive economic data until it is released, which includes the monthly jobs report. This data is shared with the President by the Council of Economic Advisers.

Deese and staff from NEC have likely done their own analyses ahead of the Labor Department’s publication. The historical data from the Bureau of Labor Statistics suggests that there could be a decline in the payrolls or a decrease in the number of people employed during the peak period of the omicron variant infections.

Deese stated that “if you think about the impact of omicron early January on the number of people out sick, then we expect some variation in the data.”

The data that is already publicly available may indicate a difficult month for the jobs report.

Results from the U.S. Census Bureau Household Pulse Survey, published last week, showed that more than 14 million Americans did not workAt some time between December 29 and January 10, because they had Covid or were caring to someone with the virus or for a child who didn’t go to school.

Mark Zandi of Moody’s Analytics wrote, in a January 21 post on social media, “This is twice the number that did not work due to COVID disease in the Census survey in December and on par the peak number during the worst pandemic”

The odds of the BLS reporting a decrease in employment for January are good, considering there is so much work force. He added that the BLS survey period to calculate jobs in January overlaps with Census surveys.

These words come at a time when many Wall Street economists expect January data to be weaker that in previous months.

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Ian Shepherdson of Pantheon Macroeconomics wrote that after the data are revised in the coming weeks ahead of February 4’s official release, it will likely be consistent with private payrolls dropping by approximately 300K. However, we must remember the large margin of error that exists in payroll forecasts at this time.

The lingering pandemic makes the job of collecting reliable employment numbers more difficult — and less reflective of the final count after revisionsIt is now more common than ever before the pandemic. Over the last two years, the Labor Department has been more likely to make larger than normal revisions to preliminary employment data.

Wall Street forecasters have also been made more difficult by the pandemic. eroded the value of advanced expectations.Dow Jones polled economists and found that the U.S. had added 199,000 jobs to its economy in January. Wells Fargo, however, expects a decrease of 100,000. Nomura predicts that the decrease will amount to around 50,000 job losses.

Due to quarantining workers, Omicron has had a significant impact on the labor supply. Aditya Bhave (Bank of America economist) wrote that Tuesday’s January payrolls were facing strong risks. “We are surprised that more than half those who were unable to work as they cared for someone with Covid had a minimum of a high-school diploma. There are significant risks associated with January nonfarm payrolls because these people are more likely than others to work as wage workers.

Washington and Wall Street have the upside of February being a good month for jobs if people who were unemployed in January go back to work.

Bhave said that the Omicron shock was likely to last for a short time. In comparison to the magnitude of the wave, the rise in the number of people not working due to concerns about Covid spreading has been small. It suggests that the Covid fear is reducing as a labor supply headwind.

CNBC’s Nate Rattner (CNBC), and Steve Liesman were part of this report.

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