IT’S JOBS DAY — Wall Street forecasters expect new employment data out this morning will show that hiring picked up in December and was stronger than previously reported in November and October, as more workers resumed their job searches. But that was before Omicron. Economists are warning that the labor market could hit a speed bump over the next few months, as the variant sends new infections skyrocketing across the country. “Record coronavirus caseloads are disrupting business activity due to staff illness or quarantine, keeping workers away from job seeking due to health concerns and school disruptions, and leading consumers to curb their spending on in-person services,” Lydia Boussour, lead economist at Oxford Economics, said in a client note Thursday. “As such, we expect slower employment and labor force growth in Q1, followed by a spring rebound.” What to expect — Economists surveyed by The Wall Street Journal estimate employers added 422,000 jobs in December, up from 210,000 reported the month before. And they project the jobless rate edged down to 4.1 percent from 4.2 percent in November. Because the Bureau of Labor Statistics surveys businesses and households during the week — or pay period — that contains the 12th day of the month, December’s report won’t give a complete picture of how Omicron affected hiring or job searches, as cases soared later in the month. More than a million new cases were recorded in the U.S. on Wednesday. The uncertainty created by the new variant could complicate the Federal Reserve’s decision on when to raise interest rates, as its next crucial meeting approaches on Jan. 25-26. It also adds to broader questions about the economy, including how long supply chain disruptions will persist and whether Congress may need to provide another round of fiscal support. Payroll firm ADP reported Wednesday 807,000 new hires last month, suggesting a blockbuster month. But Morgan Stanley economists note that the divergence between ADP employment and the official BLS nonfarm payrolls figure has been large. (The average error in 2021 has been 222,000.) In any case, government employment data has been subject to large revisions over the past year, and December may be no different. NEW DISCLOSURES REIGNITE FED ETHICS SCANDAL — Federal Reserve Vice Chair Richard Clarida quietly admitted last month that he had failed to fully disclose financial trades he made at the onset of the pandemic, the latest revelation in a string of ethics problems at the central bank. From our Victoria Guida: “The new disclosure, reported Thursday by the New York Times, casts doubt on the explanation previously provided by the Fed, that Clarida's sale of the fund represented a pre-planned ‘rebalancing.’” A Fed spokesperson said all of the trades were made outside of the “blackout” period around policy decisions, during which trading is prohibited, and described the omission of certain trades as “inadvertent errors.” The news provides fresh ammunition for central bank critics, including Sen. Elizabeth Warren (D-Mass.) who have called for a fuller investigation. Better Markets President and CEO Dennis Kelleher urged the Justice Department to join the SEC in investigating the trades and called for credible outside experts to conduct a thorough probe and disclose any information to the public. “Anything less than these long overdue actions will continue to undermine the trust and faith of the American people in the Fed and its leadership,” Kelleher said. It’s also terrible timing for Chair Jerome Powell , who is set to appear before the Senate Banking Committee Tuesday for his nomination hearing. While it won’t imperil his confirmation, the revelation is sure to invite more scrutiny of Powell, as well as questions about what else the Fed hasn’t disclosed about the trading scandal that already forced two top officials to step down last year. “Powell needs public support for the Fed's impending moves to normalize monetary policy, and a renewed focus on questionable trading schemes (and what the Fed disclosed about them) makes that challenge of rebuilding public confidence in the Fed and its policy choices all the harder,” said Sarah Binder, a professor at George Washington University and expert on Fed independence and the central bank’s relationship with Congress. IT’S FRIDAY — We made it! One week down, only 10 more to go until the official start of spring. (And only FIVE weeks until pitchers and catchers report, if that’s your thing.) Will we ever see those remaining Fed nominations? Will the Senate ever return to Build Back Better? Send us your thoughts on how 2022 is going and where it’s headed at kdavidson@politico.com or aweaver@politico.com, or hit us up on Twitter @katedavidson or @aubreeeweaver. | 
