US economic outlook obscured by shutdown-triggered data gap

The longest ever US government shutdown has created an unprecedented blind spot over the health of the world’s biggest economy as critical data reports are set to be delayed or ditched.

Agencies including the Bureau of Labor Statistics and Bureau of Economic Analysis were largely unable to collect and publish data during the 43-day shutdown, creating a gap in statistical series that will obscure the economic picture for investors and policymakers. 

As furloughed employees return to work, many reports will be delayed, while others will be partly or fully scrapped — leaving a hole in some crucial indicators.

“We were in a very dark and foggy place [during the shutdown],” said Torsten Sløk, chief economist at Apollo. “The fog is clearing, but you don’t go from night to day in 10 minutes.”

The prolonged downtime has heaped pressure on US statistical agencies, which were already struggling with funding cuts, a shrunken workforce and increasing politicisation of their work.

In August Donald Trump fired BLS commissioner Erika McEntarfer following a gloomy jobs report he said was “rigged” against him, stoking a debate over trust in data long seen as the gold standard in gauging America’s economic health. 

“The shutdown did no favours for BLS and federal data in general given recent events,” said Paul Schroeder, executive director of the Council of Professional Associations on Federal Statistics.

“I think we’re definitely in a watershed moment, not just because of this, but because of everything else that’s been happening and the attention that federal statistics is receiving.”

Erica Groshen, a former BLS commissioner who ran the agency the last time a shutdown curtailed its operations in 2013, said the agency faced “much more difficult questions” this time around because of the length of the shutdown and the agency’s weakened workforce. 

“BLS will prioritise the principal federal economic indicators and they will want to ultimately prioritise continuity — but they may not be able to,” she said. 

More than 30 reports from the BLS, BEA and Census Bureau tracking everything from construction and trade to GDP and inventories were skipped during the six-week period.

Data releases are expected to recommence with the publication on Thursday of September employment figures that were collected and processed before the government closed on October 1. A September inflation report was released during the shutdown after some BLS employees were recalled.

But other reports — including closely watched gauges of inflation and the labour market — will take time to put together. Furloughed BLS workers were forbidden to work on anything, meaning the data needed to complete October reports was not collected.

The BLS said in a statement that “it may take time to fully assess the situation and finalise revised release dates”. The BEA said it was “still in the process of determining our adjusted release schedule”.

The Trump administration, meanwhile, warned that inflation and jobs figures for October would “likely never” be released. White House press secretary Karoline Leavitt said on Thursday that any data that was released would be “permanently impaired”.

Some data on the October jobs market will be recoverable as it is mostly submitted to the BLS directly from companies, which retain their own records. The household survey used to calculate the unemployment rate is largely conducted by phone, however, making it difficult to collect retroactively. 

“We’re going to get half the employment report,” Kevin Hassett, director of the National Economic Council, told Fox News. “We’ll get the jobs part, but we won’t get the unemployment rate, and that’ll just be for one month.”

Consumer price data faces bigger challenges. While some pricing data comes from scraping websites or from private providers, roughly two-thirds is collected by in-person visits to stores, meaning it needs to be done in real time. 

“You can’t just walk into a Costco in mid-November and find out what the price of a good was in October,” said McEntarfer, the former BLS commissioner sacked by Trump in August, on Bluesky. “That’s why an October CPI isn’t possible.”

Any hole in the data series will have potential ramifications for everything from social security payments that are pegged to inflation numbers to businesses making hiring and inventory decisions ahead of the holiday season.

“Businesses are already dealing with uncertainty around trade policy, consumer spending, disposable personal income over the past couple of months,” said RBC economist Mike Reid. It could take months for federal data to normalise from the shutdown, Reid said. In the meantime, “you don’t want to take risks and make the wrong decision.”

The data drought could also have significant impacts on the Federal Reserve as it weighs whether to continue cutting interest rates when it meets in December. 

Fed chair Jay Powell has insisted a cut next month is not a “foregone conclusion” and that the lack of data may influence the board’s decision. “What do you do when you’re driving in the fog? You slow down,” Powell said last month. 

“We have a very divided FOMC at the moment,” said Barclays economist Marc Giannoni, referring to the Fed’s rate-setting Federal Open Market Committee, which has been split on the pace and timing of rate cuts.  

“The absence of new data makes it unlikely that their opinions are going to change one way or another. Hopefully we’ll have some data releases before December — otherwise it could be quite a contentious meeting coming.”