The rapid spread of the Omicron variant led to some slowing in economic activity early this year, but with cases having declined sharply since mid-January, the slowdown seems to have been brief. The labor market is extremely tight. Payroll employment rose by 6.7 million in 2021, and job gains were robust in January.
The unemployment rate declined substantially over the past year and stood at 4.0 percent in January, reaching the median of Federal Open Market Committee (FOMC) participants’ estimates of its longer-run normal level. The improvements in labor market conditions have been widespread, including for workers at the lower end of the wage distribution as well as for African Americans and Hispanics.