The White House announced on Wednesday that critical federal inflation and labor reports, which are typically key indicators for the economy, are unlikely to be released due to the ongoing government shutdown. Press Secretary Karoline Leavitt expressed concerns that this situation may have permanently affected the federal statistical system, implying that essential data such as the October Consumer Price Index (CPI) and jobs reports may not see the light of day. This disruption leaves policymakers at the Federal Reserve in a challenging position, as they navigate important economic decisions without complete data.
With federal workers suspended from their roles since October 1, it was already anticipated that the October CPI data might not be available. The White House did clarify, however, that the September jobs report, which was compiled before the shutdown, will be released as scheduled once the government resumes operations. Meanwhile, the October jobs report, which was due last week, may not be published.
The most recent jobs data before the shutdown was the August report, released on September 5. Economists and market participants are growing increasingly apprehensive about the potential “fog of data” that will envelop the economy following the shutdown. There are mixed opinions regarding how this data gap will influence the Federal Reserve’s forthcoming monetary policy decisions.
Some economists believe the Fed may rely on alternative sources of information, such as the private jobs report from ADP, which recently indicated that 42,000 jobs were created in October. Although this report offers a slightly more hopeful perspective on employment, it contrasts with several official reports from the Bureau of Labor Statistics that have suggested a weaker labor market.
Fed Chair Jerome Powell addressed the situation on October 29, stating that the absence of government data is a “temporary state of affairs.” He noted that if the data shortage affects the upcoming December meeting, it’s important to proceed with caution, as one would do when “driving in the fog.”
Given the current economic complexities, there remains hope that the creation of private job opportunities will provide some stability and insight during this rough patch. As the situation develops, the resilience of the labor market and how policymakers adapt can offer glimmers of optimism in navigating economic uncertainty.