The United States is nearly five weeks into a government shutdown that has hobbled the nation’s statistical agencies and created the longest economic data blackout in history. The normally steady flow of government data on hiring, spending, wages, prices and other areas has slowed to a trickle, leaving economists to try to fill in the gaps using anecdotes and a melange of incomplete and often contradictory indicators from private sources.
There is no good time to go without reliable data. But this might be a uniquely bad one. Job growth slowed sharply over the summer, leading to fears that the labour market could be taking a rapid turn for the worse. Such a development would most likely draw a swift response from officials at the Federal Reserve, who are responsible for maximising employment while keeping inflation stable. But policymakers have no reliable way of knowing whether those trends continued into the fall, or perhaps reversed.
Tara Sinclair, an economist at George Washington University, likened the situation to driving down a road in a heavy fog. “Until something comes along in front of you, or until the road curves, you might be OK,” she said. “But at some point, there will be something in front of you, or the road will curve, and we don’t know when that will be.”
Jerome H. Powell, the Fed chair, used the same analogy on Wednesday, acknowledging that the lack of data is exacerbating an already difficult situation for policymakers who are weighing the risk of a softening labour market against still-stubborn inflation. The central bank lowered interest rates Wednesday by a quarter point for the second time this year. But in a sign of the deep divisions on the committee, two officials dissented in opposite directions – one calling for a larger cut, and one for no cut at all.
