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The federal shutdown is interrupting the usually steady flow of government economic data, which could consequently make it harder for policymakers and organizations to make informed decisions.
Ahead of the midnight Tuesday appropriations deadline, the Department of Labor noted in a report that its Bureau of Labor Statistics “will suspend all operations” during a shutdown. This means the BLS will not release new reports, including the scheduled monthly jobs numbers this Friday, nor will it collect survey data while the government is halted. A prolonged shutdown would mean further delays in economic data and “a reduction in quality of data collected,” according to the report.
“The implications of this are potentially quite large,” Abigail Hall, an economics professor at the University of Tampa, told CFO Brew.
Beyond the jobs report, the BLS is also slated to release inflation data later this month, including the Consumer Price Index on Oct. 15 and the Producer Price Index (or wholesale inflation) on Oct. 16. The Federal Reserve relies on this data to make interest rate decisions. Economic data that is missing or less accurate due to the shutdown can “have remarkably impactful implications” on its decision-making, Hall said.
Businesses also use economic data to help guide their own strategic decisions. A delay of one or two months’ worth of BLS data “would not materially impact planning and capital deployment decisions,” but a lengthier delay may be a bigger deal, according to Michael Perica, CFO of IT services firm Rimini Street.
Since the BLS data is “inherently a lagging indicator,” organizations use it to analyze long-term trends, Perica wrote in an emailed statement to CFO Brew. “If there is a longer, drawn-out shutdown where a few cycles are missed, this could take away the ability to include this data in key capital deployment decisions, which is clearly sub-optimal.”
Familiar territory, but with a new wrinkle. The BLS has delayed data releases before in previous shutdowns, Hall noted. What makes this one different from others in recent history, she said, is that the shutdown comes amid a period of greater economic uncertainty.
“It'll be easier for us to maybe see this with hindsight, but it's difficult for us to maybe understand the full implications of this just given the contemporary policy uncertainty, and how much people are relying on those numbers to make really important decisions,” she said.
The shutdown also comes at a peculiar time for the Fed, whose leaders “are already at odds” over whether and by how much to cut rates, the New York Times reported.
Salt in the wound. The BLS was already going through some tumultuous times even before the shutdown. President Trump fired the former BLS chief in August after a weak July jobs report that he claimed, without evidence, was inaccurate.
Trump nominated the Heritage Foundation’s E.J. Antoni as the new head of BLS, but the White House withdrew the nomination this week, CNN reported.