Federal Government Rehires Furloughed Workers to Publish September CPI: Implications for Inflation Policy and Market Volatility

The U.S. Bureau of Labor Statistics (BLS) has taken an extraordinary step to rehire furloughed workers to produce the September 2025 Consumer Price Index (CPI) report, a critical data point for shaping inflation policy and monetary decisions, according to a Bloomberg report. This move, driven by the need to meet the Social Security Administration's legal deadline for the cost-of-living adjustment (COLA) and to inform the Federal Reserve's October 28–29 policy meeting, underscores the fragility of the U.S. statistical infrastructure amid political dysfunction, as reported by The New York Times. While the raw price data for September was collected before the government shutdown, the rehiring of economists and IT specialists to process it has delayed the report's release beyond its original October 15 deadline, Reuters reported.

Data Reliability and Policy Timelines

The BLS's decision to recall staff ensures the September CPI remains a reliable barometer of inflation, as the price collection period was completed before the shutdown, the Boston Fed noted. However, the delay raises concerns about the timeliness of subsequent reports. If the shutdown disrupts October's data collection, the next CPI release could face further delays, creating a feedback loop of uncertainty for policymakers and markets, an issue highlighted by Johns Hopkins analysis. This is particularly problematic for the Federal Reserve, which relies on timely data to calibrate its inflation-fighting strategy.

Historically, delayed CPI data has forced the Fed into reactive policymaking. For example, during the 2022–2023 inflation surge, the Fed initially dismissed early signs of persistent inflation, only to accelerate rate hikes after data confirmed entrenched price pressures, as shown in the rate history. A similar dynamic could unfold in 2025, with the Fed forced to rely on older data or forward-looking indicators like the PCE price index, which currently shows inflation at 2.9% year-over-year according to PCE data.

Market Volatility and Investor Behavior

The delayed CPI release has already amplified market volatility. Investors, who had priced in a 90% probability of a 25-basis-point rate cut at the September 16–17 Federal Open Market Committee (FOMC) meeting, now face heightened uncertainty about the Fed's next move, per Monthly Market Pulse. This uncertainty is compounded by President Donald Trump's expansive tariffs, which have raised costs for consumers and businesses, contributing to "sticky" service-sector inflation, as discussed in MarketMinute.

Equity markets have responded with mixed signals. The S&P 500 and Nasdaq have benefited from tech-sector resilience, while consumer discretionary stocks show signs of weakness, a trend outlined in the Investment Outlook. Investors are increasingly hedging against inflation and geopolitical risks by shifting into uncorrelated assets like gold and real assets, according to Monthly Market Commentary. Meanwhile, bond yields have fluctuated as traders reassess the likelihood of further rate cuts, with the 10-year Treasury yield hovering near 3.8%, as noted in the Fed rate decision analysis.

Policy Implications and Historical Precedents

The September 2025 rate cut-marking the Fed's first easing since 2023-reflects a cautious pivot toward accommodative policy, mirroring past cycles such as the 2001 dot-com bust and the 2019 rate cuts, as discussed in a September rate cut analysis. However, the Fed's reliance on the PCE index, which excludes volatile items like food and energy, may understate the true inflationary pressures faced by households, a point raised in an US CPI preview. This divergence between headline CPI and core PCE could fuel skepticism about the Fed's ability to meet its 2% inflation target, particularly if the delayed CPI data reveals persistent price increases in services or housing.

The broader lesson from history is clear: delayed data forces central banks to operate with incomplete information, increasing the risk of policy missteps. In 2025, the Fed's challenge is to balance the need for timely action with the constraints imposed by political gridlock.

Conclusion

The rehiring of BLS staff to publish the September CPI is a temporary fix for a systemic problem. While the data itself remains reliable, the delay highlights the vulnerability of U.S. economic policymaking to political disruptions. For investors, the key takeaway is the growing importance of hedging against both inflation and policy uncertainty. As the Fed navigates a complex macroeconomic landscape, markets will likely remain volatile until the CPI data stream is restored to normalcy.