US Government Shutdown Threatens Key Economic Data Releases

US Government Shutdown Imperils Economic Data: An Analytical Overview

White House Press Secretary Karoline Leavitt stated on Wednesday that the October jobs report and the Consumer Price Index (CPI) report are likely to be delayed or not released due to the ongoing government shutdown in the United States.

The government shutdown has led to the cessation of operations at the Bureau of Labor Statistics (BLS) and other key statistical agencies, depriving policymakers of essential data needed to assess the health of the US economy. While some economists believe that some data can be collected later, there are concerns that certain data may be permanently lost, particularly those related to the October CPI and unemployment rate.

The Bureau of Labor Statistics has not yet announced alternative plans for data release. It is expected that the bureau may have to combine two months of data into one report to compensate for the delay. The BLS has declined to comment on requests for clarification.

White House Statements

Leavitt expressed concern, stating, "Democrats may have permanently damaged the federal statistical system. The October jobs report and CPI may never see the light of day." The White House did not provide further details on the sources of this information.

Political Background

The roots of the crisis go back to the Democrats' demands to include an extension of Affordable Care Act subsidies and the repeal of Medicaid program cuts in any temporary government funding bill, which Republicans rejected. In a subsequent development, several Democratic senators voted with Republicans to approve a compromise to reopen the federal government.

Prior Warnings

The White House warned late last month that the October inflation report might not be released, stressing that this would be the first time in history that the data would be skipped. The Bureau of Labor Statistics indicated at the time that it would resume normal operations after funding was restored and would notify the public of any changes to publishing plans.

Report Details

Leavitt did not clarify whether her concern was related to the full jobs report or just part of it. The report consists of two surveys: an establishment survey that produces core data on nonfarm payroll employment, and a household survey responsible for counting the unemployment rate. While most companies keep records and report data electronically, conducting a retrospective telephone survey of individuals and asking them about their employment status in a specific week in October would be difficult.

Impact on Federal Reserve Decisions

Kevin Hassett, director of the White House National Economic Council, said in an interview with CNBC: "To my knowledge, some surveys have not been completed at all. We may never know the true situation for that month. We will be in the dark until statistical agencies are back up and running."

Leavitt fears that the absence of this data will force Federal Reserve policymakers to "fly blind at a critical time." Federal Reserve officials are scheduled to hold their next meeting on December 9-10 to decide whether to implement a third interest rate cut this year.

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