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U.S. payrolls expanded by 467,000 in January 2022, far more than first predicted, as wages climbed by 5.7 percent. U.S. employers hired at a rapid pace late last year and into January, bolstering the economy in the wake of the Omicron wave of COVID-19 and staffing shortages.
U.S. stocks were generally higher as government yields rose sharply after the previously expected report. These expansions could have gone even higher if not for the surge of Omicron cases.
The U.S. Department of Labor noted that nearly 2 million workers were prevented from looking for a job in January because of the pandemic. The number of Americans who said they were unable to work because their employer closed or lost business due to the pandemic nearly doubled in January from December.
The combination of low unemployment and strong wage growth is expected to keep the Federal Reserve on track to start raising interest rates from near zero at its March meeting. Policymakers are in urgent need to bring down inflation, which has been at the highest level in 40 years.
Workers have more incentive to return to work than they did previously due to increasing paychecks. Wages grew briskly, and employers added 6.67 million jobs last year — with 60,000 more positions than previously reported in 2021.
Those revisions, previously conducted each January, included changes in the Labor Department estimates. They also included substantial adjustments last summer, which were offset by reductions later in the year.
Overall, the 2022 U.S. labor picture looks better than it has been for the last few decades with solid performance.
Inflation, Demand and Retail Spending
Monthly sale gains of 3.8 percent are broad-based as consumers overcome eroded buying power. U.S. shoppers spent more at the New Year as the Omicron wave of COVID-19 started to recede, and consumers confronted a four-decade rise in prices.
Retail sales, a measure of spending at stores, rose by a seasonally adjusted 3.8 percent in January 2022 from the prior month. That marked the strongest monthly gain in retail spending since March a year ago. The jump added to signs that 2022 could see plentiful jobs, sizable wage gains and consumers with cash to spend.
Supply shortages, impacted by inward shipment shortages from China and elsewhere, were increasingly stymied as shipments got stuck in inward ports that found themselves unable to handle much of the product that had arrived. However, economists expect purchasers of goods such as electronics and furniture to pick up as the current pandemic wave eases.
It’s already noted that President Joe Biden is focused on ensuring that America’s domestic economy will accelerate its current uprising. The federal government is a major buyer of goods and services at $600 billion a year. The Biden administration committed itself to strengthen the Buy American Act by increasing the domestic content threshold of government purchases to 60 percent and a phased increase to 75 percent.
This governmental push will impact economic growth to its fullest.
The pipe, valves and fittings industry will benefit from this governmental realization, even if only for the remainder of the year.
How Will World Economy Fare in 2022?
While the world economy, in general, will slowly rebound from the previous year of the COVID-19 pandemic impact, the belated crunch of Omicron will continue its economic bombshell. The bad news lies in the military concern over Russia/Ukraine and the economic energy impact.
But the worst downward potential will come from the inflationary disaster that hit a high point as 2021 ended. The latter could be even worse as the Federal Reserve reverses its restraints on interest rates.
Increased inflation is a complicated issue in the United States, as expected, highly needed components were unavailable or stuck in overloaded harbors. The extent of the inflationary runaway is further impacted by this. Also, the Biden-directed government spending will have a negative effect on the global economy in general.
These factors may strengthen major corporations but will be blight on thousands of mid-sized and smaller businesses.
The big world factor will be China, as that country attempts to overwhelm the United States in its total gross domestic product this year and beyond.
The other bad news comes from Russia’s aggressive invasion of Ukraine and its impact on the world’s energy availability. Russia’s action against Ukraine will likely shut down global oil, urgently needed by most of Europe and even the United States.
2022 will likely do well, more than the previous year, but dangerously impacted by global animosity that could be as much as general warfare.