A potential federal government shutdown would have significant consequences for access to crucial economic data. Agencies such as the Bureau of Labor Statistics, the Census Bureau, and the Bureau of Economic Analysis would suspend operations if Congress fails to reach a funding deal by Sunday. This would likely result in the delay of important data releases, including the monthly jobs report and the Consumer Price Index.
Government shutdowns have disrupted economic data in the past. The 2013 funding lapse delayed numerous releases, including the September employment report. A more recent shutdown in 2018 and 2019 affected data from the Commerce Department, including gross domestic product figures. However, the current shutdown threat occurs at a sensitive time for the economy. Policymakers at the Federal Reserve are trying to manage inflation without causing a recession, which requires precise decision-making based on accurate information.
David Wilcox, an economist at the Peterson Institute for International Economics and Bloomberg Economics, emphasized the importance of maintaining an uninterrupted flow of information to monetary policymakers during this delicate moment. He argued that taking on the complex task of monetary policy becomes even more challenging when restricting the availability of necessary data.
While a short shutdown would only result in temporary delays in data releases, a more prolonged shutdown could cause lasting damage. Surveys for labor force statistics, for instance, are conducted in the middle of each month. If the shutdown prevents the October survey from taking place as scheduled, the resulting data might be less accurate as respondents struggle to recall details from weeks earlier. Additionally, some data might become impossible to recover after the fact, such as information on consumer prices.
University of Michigan economist Betsey Stevenson warned that missing two months of data collection would permanently deprive policymakers of crucial information. This would increase the risk of misreading the economy and making mistakes, such as failing to detect an increase in inflation or overlooking signs of a recession.
Ben Harris, who previously worked at the Treasury Department and is now at the Brookings Institution, expressed concern about the Fed making critical decisions without access to significant data. Comparing it to a pilot landing a plane without knowledge of the runway, Harris emphasized the terrifying nature of the situation.
Despite the limitations imposed by a potential shutdown, policymakers would not be entirely without information. The Federal Reserve, which operates independently and would not be affected, would continue to produce its own data on various economic indicators. Furthermore, private-sector data providers have expanded in recent years, offering alternative sources of information on topics like job openings, employment, wages, and consumer spending.
However, former commissioner of the Bureau of Labor Statistics Erica Groshen argued that private data cannot match the breadth, transparency, and reliability of official statistics. She recalled that during the 2013 shutdown, Fed officials contacted her department to explore the possibility of providing funding to ensure the timely release of the jobs report, an option that was deemed illegal.
The impact of a lack of data would extend beyond policymakers. Trucking companies rely on diesel prices published by the Energy Information Administration to determine fuel surcharges. Businesses use inventory and sales data from the Census Bureau to make decisions regarding order placement. The Social Security Administration requires October consumer price data to finalize the annual cost-of-living increase in benefits.
In conclusion, a federal government shutdown would disrupt access to vital economic data at a critical time for the economy. It would not only affect policymaking but also have wider implications for various sectors that rely on this information. The longer the shutdown, the greater the potential damage and the higher the risk of misjudging the state of the economy.