WASHINGTON: The US economy ended 2021 on a sour note with a worse-than-expected employment report last Friday underscoring the challenges awaiting President Joe Biden in the new year, as the Omicron variant runs rampant and his legislative agenda stalls.

       The world’s largest economy gained only 199,000 jobs in the final month of the year, the Labour Department said, defying expectations for an increase of hundreds of thousands of positions fuelled by the recovery from Covid-19.

       However, the unemployment rate dropped to 3.9%, not far from where it was before the pandemic struck, and Biden hailed the report as marking “a historic day for our economic recovery.”

       Analysts warned the days ahead might nonetheless grow darker as Covid cases caused by the new variant surge and again complicate daily life.

       “All of this is before Omicron, which is making lots of people sick and disrupting lots of businesses,” Mark Zandi of Moody’s Analytics tweeted, noting that the survey was based on data collected before the recent spike in infections. Businesses are getting better at managing through the waves, but the pandemic is still calling the shots for the economy.”

       The data was the latest setback for Biden after his marquee spending plan called Build Back Better was put on hold in Congress due to the resistance of a key lawmaker in his Democratic Party.

       The Republican opposition in the Senate meanwhile tweeted that the report marks “another huge miss for the Biden economy.”

       The recent surge in inflation has sapped public support for Biden, however the most potent actor against it is not the White House but the Federal Reserve.

       Analysts say there was enough good news in this report for the independent central bank to move closer to increasing interest rates as soon as March, but the expected damage from Omicron could complicate the situation.“In the context of a rapidly deteriorating health situation, the (first quarter) lull in economic activity will force Fed chair (Jerome) Powell to walk a tightrope at the upcoming policy meetings,” Gregory Daco of Oxford Economics said.

       The United States added an average of 537,000 jobs per-month for a total of 6.4 million last year, while the fall in the unemployment rate also brought it near to the 3.5 percent level of February 2020, before the economy collapsed. A separate Labour Department household survey showed the number of employed people rose by 651,000 in December, a sign the report may have been stronger than the headline indicates. — AFP