If the federal government shuts down at the end of this week due to a lack of financing, the release of important U.S. economic data, such as employment and inflation figures that are crucial for investors and policymakers, will be postponed indefinitely, a government source warned.
The suspension of the reports would affect all government organizations, including the Bureau of Labor Statistics (BLS) of the Labor Department, the Census Bureau, and the Bureau of Economic Analysis (BEA) of the Commerce Department. As a result, key decision-makers at the Federal Reserve, investors, companies, and regular citizens would be left in the dark.
A dispute within the Republican Party has prevented Congress from passing any spending legislation to yet in order to fund federal agency programs in the fiscal year beginning on October 1. Leaders in the U.S. House of Representatives, which is controlled by Republicans, were scheduled to attempt to approve drastic budget cutbacks this week that have no chance of becoming law, heightening the likelihood that there will be a shutdown on Sunday.
In response to inquiries from Reuters, a Biden administration official who was speaking anonymously stated that the Bureau of Labor Statistics would stop all program operations and only disclose finished data that was slated for distribution as part of orderly shutdown activities. Therefore, neither the September jobs report nor the Consumer Price Index would be made public.
The next monthly employment report is currently slated to be released by the Labor Department on October 6. On October 12, the CPI report is due.
The strategy differs from the previous shutdown, which occurred between December 2018 and January 2019, when the Labor Department was unaffected and data publication by the BLS and its Employment and Training Administration was unaffected. This means that during any shutdown this time, the weekly claims data for unemployment insurance will likewise not be released.
The official stated that the majority of the Census Bureau’s services would end, including the creation of economic indicators, the compilation of economic census data, and work on the American Community Survey.
The publication of important data, such as the September retail sales, housing starts, and new home sales reports, may be delayed as a result. The release of the first estimate of third-quarter GDP, which was scheduled for late October, may be postponed depending on how long the shutdown lasts.
It is also likely to have an impact on the September reports for durable goods orders, early economic indicators, consumer spending, income, and the crucial inflation figures being followed by Fed officials.
For Fed officials, who decided not to raise interest rates last week but are nonetheless on guard to take additional action if necessary to further restrain inflation, a data blackout would occur at a crucial time.
The Fed would continue to publish data, policy announcements, and other publications as a self-funding organization. On October 11, the U.S. central bank is expected to make the minutes of its policy meeting from September 19–20 public.