Data Drought: The Aftermath of a Government Shutdown

The government is back to work, but the economic data drought continues. The Bureau of Labor Statistics (BLS) has announced that the September jobs report will be released on Thursday, ending a six-week dry spell that started when federal funding ran out on October 1. However, economists, policymakers, and investors will have to wait longer for a clearer picture of the labor market and other key economic indicators like inflation and spending. The data that does come out might not be complete. Some reports could be based on partial information, adding more uncertainty than usual. Sadly, some data might never be recovered, leaving permanent gaps in our understanding of the economy. This lack of reliable data is a big problem for the Federal Reserve. They're already struggling to make sense of mixed economic signals and are divided on how to respond. Without much of the usual data, they'll be flying blind into their next meeting in December. It's not just the Fed that's in the dark. State and local leaders, business executives, and investors all rely on this data to make important decisions. Some economists are worried that the shutdown has caused long-term damage to a statistical system already struggling with budget cuts and high staff turnover. The BLS is currently being run on a temporary basis, and many senior leadership positions are vacant. There are concerns that some employees might not return after the shutdown, further straining the agency's resources. The Census Bureau has announced that it will release delayed reports on construction spending and international trade later this month. However, it's still unclear when other data releases will resume or how long the delays will last. Collecting data on the economy during the shutdown itself is particularly challenging. For example, to calculate the Consumer Price Index, government workers check the prices of thousands of items in stores across the country. They can't realistically go back and ask how much a bag of flour cost a month ago. The October jobs data is also in question. While businesses should have records of their employees, the government conducts a monthly survey of households to calculate the unemployment rate and other labor market measures. Many people are unlikely to remember detailed information about their work situation from weeks ago. Even if the government could run the survey late, it would jeopardize the next jobs report. As a result, most economists say it's impractical to conduct the October household survey, which would result in the first missing month in the survey's 77-year history. This gap could have long-lasting repercussions, affecting other economic measures and the accuracy of future surveys. Statistical agencies will need to publish the reports they missed while continuing to collect and publish new data, a task that could take months, especially given the length of this shutdown.