Government Shutdown May Halt Release of Key Economic Data

The impending government shutdown, driven by funding issues, could lead to the indefinite suspension of crucial U.S. economic data publications. These reports, which hold immense significance for policymakers and investors, encompass key information such as employment and inflation figures. This disruption would encompass various government agencies, including the Bureau of Labor Statistics (BLS) within the Labor Department, as well as the Census Bureau and Bureau of Economic Analysis (BEA) within the Commerce Department. Such a halt would leave Federal Reserve policymakers, businesses, investors, and the general public without essential information needed for decision-making.

The current predicament arises from Congress’s inability to pass spending bills to fund federal agency programs for the fiscal year beginning on October 1. A rift within the Republican Party has hindered progress, with the Republican-controlled House attempting to advance spending cuts that are unlikely to become law. This situation heightens the likelihood of a government shutdown by the end of the week.

In response to these concerns, a Biden administration official, speaking anonymously, explained that in the event of a shutdown, the Bureau of Labor Statistics would cease all program operations, resulting in the cancellation of the September jobs report and the Consumer Price Index release. The Labor Department’s scheduled release dates for the next monthly employment report (October 6) and the CPI report (October 12) would be impacted.

This approach differs from the previous government shutdown in December 2018 to January 2019, which did not affect the Labor Department and allowed the BLS to continue publishing data. Consequently, data such as unemployment insurance weekly claims would also remain unpublished during any shutdown.

Furthermore, the Census Bureau’s services, including the production of Economic Census data and economic indicators, would come to a halt, leading to delays in critical data releases for September, such as retail sales, housing starts, and new home sales reports. Depending on the shutdown’s duration, the release of the first estimate of third-quarter GDP, due in late October, could also be postponed.

This disruption in data release would coincide with a critical period for Federal Reserve officials, who recently opted not to raise interest rates but remain vigilant about taking further action to control inflation. Although the Fed operates as a self-funding agency and would continue to release data, policy statements, and other reports, the potential delay in essential economic indicators could complicate their decision-making process. The central bank is set to release the minutes from its September 19-20 policy meeting on October 11.