Following President Donald Trump's signing of a House-passed funding bill Wednesday evening, the government is commencing its reopening, thereby concluding the unprecedented 43-day shutdown. However, the White House has indicated that the inflation and jobs figures that were not released during the shutdown might be irretrievably lost, occurring mere weeks before the Federal Reserve's deliberation on December rate reductions.
TL;DR
- October jobs and inflation figures may never be released due to the government shutdown.
- White House claims the Federal Statistical System is permanently damaged by the data loss.
- The Federal Reserve may be "flying blind" when deciding on December rate reductions.
- Economists are divided on the Fed's ability to cut rates without crucial economic data.
“The Democrats may have permanently damaged the Federal Statistical System with October CPI [Consumer Price Index] and jobs reports likely never being released,” White House Press Secretary Karoline Leavitt told reporters on Wednesday. “All of that economic data released will be permanently impaired leaving our policy makers at the Fed flying blind at a critical period.”
A government shutdown commenced on October 1st, extending nearly two weeks into November. This occurred due to disagreements between Republicans and Democrats regarding spending bills and whether to fund the Affordable Care Act's improved premium tax credits. These credits are scheduled to end by the close of 2025, potentially causing significant premium increases for Many Americans. The Senate is scheduled to vote on this matter next month, as a component of the recently approved spending legislation.
With the government's reopening set for Thursday, the White House suggests that official figures for last month's inflation and employment, which were thought to be merely delayed, might not be published at all.
For the first time ever, monthly government figures on economic indicators might not be released, a situation that hasn't occurred since their inception. The Bureau of Labor Statistics (BLS) experienced furloughs among its staff during the shutdown, which halted the agency's ability to gather data throughout October.
Established in 1948, the Current Population Survey is conducted by the U.S. Census Bureau and the BLS, surveying approximately 60,000 households monthly. The information gathered from this survey helps generate the BLS’ “Employment Situation,”, which is a thorough official jobs report.
“For the first time in over 900 months, the Current Population Survey (CPS) may not gather monthly information from a representative sample of American households about whether they’re working or looking for work,” Friends of BLS, an independent coalition established by major statistical, business, and research organizations, wrote on its website on Wednesday.
Meanwhile, the BLS first published a national Consumer Price Index (CPI), or inflation data, in 1921, according to the Federal Reserve Bank of Minneapolis.
An 80% majority of economists anticipate the Fed will reduce rates by a quarter point on December 10, as indicated by a Reuters poll involving 105 economists, despite a lack of data. This action would lower rates to between 3.5% and 3.75%, representing the third consecutive quarter-point decrease.
At their October meeting, the Fed enacted its most recent interest rate reduction. Even without monthly government figures for employment and inflation, Fed Chair Powell said indicated the choice was made due to evidence of a softening job market and easing price pressures.
Some economists see this trend continuing.
“The general sense is the labor market still looks relatively weak and that’s one of the key reasons why we think the FOMC will continue to deliver that December cut,” Abigail Watt, U.S. Economist at UBS, told Reuters.
However, some economists remain skeptical. Torsten Sløk, chief economist at Apollo Global Management, calculates that prices for 55% of goods included in the CPI are increasing at a rate exceeding 3%, which is higher than the Fed's 2% inflation objective.
“This is the reason why it is difficult for the Fed to cut interest rates in December,” Sløk wrote on Wednesday.