Potential US Government Shutdown Threatens Vital Economic Data Releases


In the event of a US government shutdown, the Bureau of Labor Statistics warns of data cessation, impacting crucial economic indicators including inflation and unemployment figures. The absence of pivotal government statistics poses a challenge for investors and the Federal Reserve in deciphering the state of the US economy.

As of now, the economic trajectory remains uncertain: Inflation may approach the Fed's targeted 2% without a surge in unemployment, constituting a "soft landing". Conversely, the economy might teeter towards recession as the repercussions of the Fed's 11 rate hikes deepen.

Data underpins the understanding of the economy, with the Bureau of Labor Statistics routinely releasing vital metrics like the Consumer Price Index (measuring inflation) and the Employment Situation Summary (evaluating unemployment and job expansion). These reports influence investment decisions.

As the month-end spending deadline looms, House Republicans grapple to unify around a defense spending bill and are contemplating a short-term government funding solution. Simultaneously, some Republicans pose a challenge to House Speaker Kevin McCarthy, threatening repercussions if their demands are not met. This political impasse is anticipated to result in a government funding gap.

A spokesperson stated, “In the event of a federal government shutdown, the Bureau of Labor Statistics will suspend data collection, processing, and dissemination. Once funding is restored, BLS will resume normal operations and notify the public of any changes to the news release schedule on the BLS release calendar.”

Although the partial government shutdown in early 2019 had a restricted impact on BLS's survey activities, it led to a delay in approximately a dozen data publications. Greg Daco, chief economist at EY-Parthenon, highlighted that “the 35-day government shutdown led to a data drought with the postponement of over 10 key data releases including trade, housing, and consumer spending data.”

While private entities furnish data pertaining to various economic facets, federal sources remain pivotal for policymakers.

Agron Nicaj, US economist at MUFG, emphasized, “Decisions are made based on the consistency and reliability of government data. This is especially true in today’s economic climate where uncertainty is high and the margin of error is very small for the Fed to over or under tighten monetary policy.”