RPT-BREAKINGVIEWS-Extended data blackout threatens to vex Fed policy

By Gabriel Rubin

WASHINGTON, Oct 23 (Reuters Breakingviews) - Fresh evidence will soon be available about the comparative value of contradictory data versus none at all. A statistical blackout during the U.S. government shutdown is leaving investors and other consumers of top-notch national labor information with notable gaps in their models. Most worryingly, it may force the Federal Reserve, whose mandate includes ensuring maximum employment, to run an unwelcome experiment.

The usual Labor Department figures on hiring, wages and layoffs have been frozen while furloughed statisticians stay home. Fed Chair Jerome Powell and his colleagues on the rate-setting Federal Open Market Committee face a tricky time to be short-changed. Job growth is slowing, artificial intelligence is booming and the supply of workers is falling from the Trump administration's strict immigration policies.

Powell has described this fragile state as a “curious balance.” An ebb in hiring combined with a depleting workforce is keeping unemployment at a low 4.3% rate. The foreign-born U.S. population fell by 1.5 million from January through June, according to a Pew analysis of Census data, a figure likely skewed by non-response rates as deportations scare immigrants away from government surveys.

Even so, the summer-end scenario looks troubling. September’s missing jobs report followed a string of disappointments. Monthly employment growth this year has averaged just 75,000, 60% less than in 2024. Wage gains, especially for low-earners, also have stagnated.

The central bank on Friday will at least get to see the consumer-price index report, deemed an “essential activity” exempt from shutdown rules. Inflation data will shed light on the degree to which U.S. tariffs have pushed up shopping bills. Price stability is only half the Fed’s mandate, however, and the central bank is increasingly concerned about the pace of hiring.

Weekly layoff totals often flag disquieting employment shifts. The longer the government sits idle, the greater the risk that benchmark borrowing costs hover around 4% to 4.25%, frustrating the president and companies alike. The Fed's recent loss of access to hiring data from payment processor ADP further blurs the picture.

Fed Governor Christopher Waller noted the challenge of interpreting “how the solid GDP data reconcile with the softening labor market." AI-related capital expenditures contributed 1.1% to U.S. economic growth during the first half of 2025, according to JPMorgan analysts, distracting from dreary consumer spending. At some point, however, the lack of data will tip the "curious balance" into a vexing disequilibrium.

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CONTEXT NEWS

The US government shutdown that began October 1 has halted the release of most official economic statistics, including the September jobs report. The monthly consumer-price index will be released late, on October 24, after the Trump administration designated its release as an essential activity not restricted by the suspension in federal appropriations.

The Federal Open Market Committee is scheduled to convene for its next meeting on October 28-29. Fed officials have signaled they plan to cut rates by 0.25 percentage points at the meeting from the current 4% to 4.25% range.