Job Growth Soars, Despite Omicron

Plus, House passes bill providing billions to compete with China ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Yay, it’s the weekend! And the Winter Olympics have started in China. Before you settle in to watch some hot curling action, here’s what you need to know. [*] Job Growth Soars in January, Despite Omicron Defying expectations of another Covid slowdown, the U.S. economy added 467,000 jobs in January, the Labor Department reported Friday. Officials also announced huge upward revisions to previous reports, raising the December job gains figure from 199,000 to 510,000 and the November figure from 249,000 to 647,000 — for a total of 709,000 additional jobs. The latest numbers indicate that the U.S. has now regained about 19 million of the 22 million jobs lost during the pandemic. Although the unemployment rate rose slightly to 4% — a result of more people entering the job market, with the labor force participation rate climbing to an expansion-high of 62.2% — experts say the latest report shows an economy that is running red hot, largely dodging the effects of the omicron variant of Covid-19 as the recovery from the pandemic plows ahead. The tight labor market boosted wages, which rose 5.7% in January on a year-over-year basis. Much less damage than feared: “We had expected Omicron to lead to a spike in unpaid sick-leave during the payroll week that would be a drag on nonfarm payrolls,” Bank of America’s Stephen Juneau said in a research note. “That obviously didn't manifest.” Instead, payrolls grew even as millions of workers reported illness in January; contrary to expectations, those illnesses did not translate into job losses. And the sectors that were expected to get hit hardest by the omicron wave, including retail and leisure and hospitality, showed positive growth during the month. There were questions, however, about the revisions made by the Labor Department that had a big impact on the report. The large increases in the number of jobs in November and December were driven in part by adjustments to the model used for seasonal hiring and firing, and the same adjustments reduced the number of jobs reported earlier in the year, though the full-year effect was still positive. Stephen Stanley, chief economist at Amherst Pierpont Securities, said the report was “a crazy mess” in some respects, but most economists agreed that the positive results reflect real gains. “I don’t think anybody would dispute that we’re moving in the right direction,” Valerie Wilson of the left-leaning Economic Policy Institute told [The Washington Post](. Biden celebrates: After spending much of the week preparing the press for a weak or even negative report, the White House quickly shifted into a celebratory mode. “America’s job machine is going stronger than ever,” President Joe Biden told reporters. “I know it hasn’t been easy. I know that January was a very hard month for many Americans,” he added. “But here’s the good news: We have the tools to save lives and to keep businesses open, keep schools open, keep workers on the job and sustain this historic economic comeback.” Labor Secretary Marty Walsh said the report shows that “America is getting back to work.” The Fed will take notice: The strong jobs report will do nothing to discourage the Federal Reserve from raising interest rates starting in March. The only question is whether the strong job growth will inspire the central bank to raise rates more quickly. “The data today were noisy, but the report was a very strong positive surprise that provided further evidence that the Fed has met its maximum employment mandate,” BofA’s Juneau said. “Overall, we think today's report keeps the Fed on track to hike rates by 25 [basis points] at every meeting this year.” House Passes Bill Providing Billions to Compete With China, Boost Research The House on Friday passed a broad bill aimed at boosting competitiveness with China and increasing federal support for scientific and technological research. The vote sets up a potential showdown with the Senate, which approved its own more modest version of the legislation last year. The House bill, called the America COMPETES Act of 2022, authorizes hundreds of billions of dollars for research and development, including $52 billion for incentive programs to ramp up U.S. production of computer chips, helping to combat a global shortage that has plagued the tech and automotive industries and fueled inflation. It also provides $45 billion over six years to address supply-chain problems and support domestic manufacturing. House Speaker Nancy Pelosi (D-CA) said the bill “will ensure that America's pre-eminence in manufacturing, innovation and economic strength, and can outcompete any nation.” The 222-210 House vote fell almost entirely along party lines. One Republican, Rep Adam Kinzinger of Illinois, joined Democrats in supporting the measure, while one Democrat, Rep. Stephanie Murphy of Florida, voted no, citing concerns about the trade provisions in the bill. “This bill is going to arrive in the Senate DOA, and because it is so chock full of progressive, protectionist policies that will never make it through the Senate,” Murphy said, according to [Politico](. Republicans, meanwhile, criticized the bill’s trade climate provisions and said it did not do enough to counter China. “It wastes billions of dollars on unrelated matters and includes no measures to make China pay for the chaos they created,” House Minority Leader Kevin McCarthy told reporters. What’s next: The House bill must now be reconciled with the Senate version, the $250 billion United States Innovation and Competition Act (USICA) of 2021, which passed in a 68-32 bipartisan vote in June. That may be a challenge, given the [differences]( between the two bills and stark partisan divides over some provisions. The compromise version will need to be approved by both chambers again, meaning it will require the votes of at least 10 Senate Republicans. The process could take quite some time though President Joe Biden on Friday called for the House and Senate to move quickly. “Business and labor alike have praised this legislation as vital for continuing the economic momentum we’ve seen over the last year, and national security leaders from both parties have said that the investments in this bill are needed if we want to maintain our competitive edge globally,” he said in a statement. “I look forward to the House and Senate quickly coming together to find a path forward and putting a bill on my desk as soon as possible for my signature. America can’t afford to wait.” Commerce Secretary Gina Raimondo likewise urged lawmakers to speed the process, telling reporters it “should take weeks, not months.” The cost question: Published reports put the cost of the 2,900-page House bill at up to $350 billion, but the Congressional Budget Office has yet to issue an official cost estimate, and budget watchers criticized lawmakers for pushing ahead without one. “Maintaining America’s economic standing by improving our ability to compete with China on research and manufacturing is a worthy investment, but it should not come at the expense of future generations saddled with more debt,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget said in a statement Thursday. She added that lawmakers “should reconsider whether it is worth borrowing from China to compete with them and instead fully offset any proposed increases in spending or reductions in taxes.” Why it matters: “The bill’s passage stands to become a major win for the White House and Democratic leaders, with the party eager to tackle voters’ rising concerns such as inflation and supply chain bottlenecks,” Politico’s Gavin Bade and Sarah Ferris write. “But even its supporters acknowledge that much of the House bill — [stuffed with Democratic trade priorities]( to increase supply chain oversight, expand tariffs and tighten U.S. trade laws — is unlikely to become law.” Read more [here]( [here]( or [here](. Number of the Day: 900,000 The U.S. death toll from Covid-19 hit 900,000 this week, according to data compiled by Johns Hopkins University. Driven by the omicron variant, which is less deadly than previous variants but far more contagious, the number of fatalities climbed rapidly in recent weeks, rising from 800,000 in less than two months. “It is an astronomically high number,” Dr. Ashish K. Jha, dean of the Brown University School of Public Health, told the [Associated Press](. “If you had told most Americans two years ago as this pandemic was getting going that 900,000 Americans would die over the next few years, I think most people would not have believed it.” Send your feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [G.O.P. 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