Even if the U.S. government "reopens" this week, the Federal Reserve still won't have access to "key data" before its December decision?
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Even if the U.S. government shutdown deadlock is expected to end this week, the resulting “black hole” in economic data will be difficult to fill in the short term, and may cause the Federal Reserve to enter the December rate meeting without key guidance.
Currently, the market generally expects that once the government reopens, the backlog of September economic reports will be released quickly, but the more crucial October and November data are facing serious delays.
According to economists, after the government resumes operations, the postponed September jobs report may be published within three days. Gregory Daco, Chief Economist at EY-Parthenon, noted that the report was “basically ready” before the shutdown.
However, due to the shutdown obstructing the October survey, collection, and processing procedures, the compilation of that month’s economic data will be more difficult, likely resulting in longer publication delays and greater margins of error.
Key Inflation Data May Miss Monetary Policy Window
Regarding the release schedule for data closely watched by the market, Morgan Stanley’s Chief Economist Michael Gapen predicts that the October and November jobs reports may be released by December 8, just in time for the Fed meeting.
But he expects October retail sales and inflation data won't be published until around December 18, by which time the Fed meeting will be over.
He also cautioned that this shutdown lasted more than twice as long as in 2013, so historical experience is of limited reference value.
This government shutdown, which began on October 1st and is the longest in history, has seriously affected the release of economic data for multiple months.
Data “Fog” Shrouds Decision-Making, Fed May Become More Cautious
The data vacuum directly affects policy clarity. KPMG Chief Economist Diane Swonk says data uncertainty is one of many reasons the Fed is “a bit nervous” about adjusting monetary policy.
This validates Jerome Powell’s previous statement: “In the fog, you slow your steps.” Maurine Haver, founder and CEO of Haver Analytics, also anticipates that statistical agencies may have to rely more on estimation models than usual when calculating the Consumer Price Index (CPI) for October and November.
This situation of missing data brings enormous challenges to a data-dependent Federal Reserve. Officials, including Fed Chair Powell, have repeatedly voiced concern over the lack of official economic data in recent months, which directly impacts monetary policy-making and has plunged the market into “fog” when assessing the economic outlook.
Although private organizations provided some data during the shutdown, their reliability falls far short of official benchmarks.
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