US Government Shutdown Threatens Key Economic Data Release

The ongoing US government shutdown has created a critical void in economic data collection, with October’s consumer price index (CPI) and employment reports potentially becoming the first in history to be permanently unreleased. White House Press Secretary Karoline Leavitt confirmed that the Bureau of Labor Statistics (BLS) and other federal statistical agencies have ceased producing and publishing economic data during the shutdown. This disruption stems from the shutdown’s impact on physical data collection methods, such as the household survey for unemployment rates and the employer survey for nonfarm payrolls.

The absence of October’s data poses a unique challenge for policymakers. Federal Reserve officials, who rely on these metrics to guide monetary decisions, now face a "data fog" that obscures critical economic conditions. Leavitt emphasized that the missing information leaves "policymakers at the Fed flying blind at a critical period," particularly as the central bank prepares for its December 9-10 policy meeting. The situation is exacerbated by the fact that October’s CPI and unemployment data require in-person or phone-based collection methods, which cannot be retroactively completed once the shutdown has disrupted the timeline.

The shutdown’s impact extends beyond October. Economists warn that even if the government reopens, the backlog of uncollected data may necessitate merging reports to restore a normal release schedule. For instance, the BLS might combine September and October data into a single publication. However, this approach risks distorting economic trends by averaging over a period marked by operational disruption. Meanwhile, the September CPI report—the last data to be published before the shutdown—has been described as an "incomplete read of the economy," with private institutions struggling to fill the void.

The labor market’s fragility further complicates the situation. The October employment report includes two surveys: the business survey (used to calculate nonfarm payrolls) and the household survey (used for unemployment rates). While the business survey may allow for retroactive data submission from employers, the household survey relies on direct contact with residents about their employment status during a specific week in October. This method, which involves time-sensitive fieldwork, cannot be replicated retroactively. As a result, the unemployment rate for October may remain permanently unknown, leaving a critical gap in understanding labor market dynamics.

Market participants and analysts have raised concerns about the long-term implications of this data void. Kevin Hassett, director of the White House National Economic Council, stated that "part of the survey may never be completed," forcing policymakers to "fly blind" until normal operations resume. This uncertainty creates additional volatility in financial markets, where investors typically rely on monthly data to gauge economic health and anticipate central bank actions.

The situation has also sparked calls for procedural reforms. Boston College economics professor Brian Bethune argued that the Labor Department should prioritize releasing November’s data first upon reopening, even if October’s reports remain incomplete. This approach would provide the Federal Reserve with the most up-to-date information for its December policy meeting, rather than adhering to a strict chronological order. Fed Chair Jerome Powell has already indicated that the central bank’s next rate cut is not a "foregone conclusion," citing the data gap as a key uncertainty.

The shutdown’s impact on economic transparency highlights broader vulnerabilities in the US statistical system. While some data can be retroactively collected, the October CPI and employment reports represent a unique case where operational delays have rendered the data irrecoverable. This precedent raises questions about the resilience of federal data collection methods in future disruptions.