A September jobs report — the Employment Situation Summary scheduled for release today but delayed by the U.S. Bureau of Labor Statistics (BLS) — is the first data blind spot created by a shutdown of the U.S. government that commenced at 12:01 a.m. EDT on Wednesday, Oct. 1.
Like many federal offices, the BLS is temporarily shuttered until lawmakers vote to reopen the government. Competing bills backed by Republicans and Democrats are not expected to pass in an afternoon vote on Friday, likely extending the shutdown to next week.
The Republican-backed continuing resolution would reopen the government at its current funding levels until Nov. 21, when another vote would be needed on a longer-term funding bill. The Democratic proposal extends funding through October and includes extensions on health care tax credits facing expiration and nonrenewal.
Data report delays
Selma Hepp, chief economist at the real estate market analytics firm Cotality, wrote in an email to Scotsman Guide that the shutdown can influence the economy and mortgage rates “by shaping investor sentiment and limiting access to key economic data.”
“Critical data from agencies such as the Bureau of Labor Statistics and Census Bureau stops flowing,” says Hepp, “forcing the Fed to lean on data from private sources and its own models, which aren’t as complete.”
The longer a shutdown lasts, she says, the more severe its impacts, especially as it concerns downstream impacts that are difficult to quantify but no less disruptive to markets and borrowers, such as administrative bottlenecks, pullbacks in consumer spending and tighter credit conditions for furloughed employees and contractors.
Shutdowns also chip away at global confidence in U.S. governance and fiscal responsibility. Yet, markets and consumers craving clarity on weak job creation, rising inflation and uncertain trade policies must make do with available data for now, such as from private surveys, earnings releases and employer updates.
One missed jobs report will not sink the Federal Reserve’s policy ship should the government reopen next week. One month of missed facts and figures would punch a lot of holes in its sails, though the duration of the shutdown is a corner no economist can see around.
“Inflation is above target, GDP growth seems to be pretty strong, and now they’re missing the key piece on employment,” says Doug Duncan, former senior vice president and chief economist at Fannie Mae. “The longer it goes before there is an agreement, the more uncertainty will increase with regard to what is true.”
The most recent Job Openings and Labor Turnover Survey (JOLTS), published Tuesday by the U.S. Census Bureau, showed hirings and firings remained essentially flat in August as job gains stagnated. Visibility into private payrolls for September emerged in figures published by ADP, a payroll processing company, with private employers shedding 32,000 jobs last month, adding to concerns of weakening job creation.
Underscoring the impact of Friday’s delayed BLS employment report, however, ADP figures bucked economists’ estimates that private employers had added 45,000 jobs.
“In this environment, the Fed may be especially cautious about adjusting interest rates,” commented Sam Williamson, senior economist at First American. “After cutting rates in September, officials signaled openness to further easing — but with limited visibility, they may prefer to hold steady until the data flow resumes.”
Consecutive months of weak jobs data through the end of the summer prompted the Federal Reserve to cut its benchmark interest rate by 25 basis points at its mid-September policy meeting. That “risk management” cut signaled a shift to bolster labor markets despite the pace of inflation remaining well above the Fed’s stated 2% target.
Fed flying blind
The next two-day Fed policy meeting is scheduled for Oct. 28 and 29. However, the pace of future easing depends on month-to-month changes in labor markets and consumer prices.
“It won’t get easier until you have that reliable data,” Duncan believes. “They may well make more calls to get more anecdotes from the business sector. They have some insight into the government sector. It’s going to be difficult.”
The Fed cannot access “locked down” data contained in scheduled releases until they are formally published, meaning no workaround exists for policymakers to get their hands on the September BLS jobs report — the final draft of which is languishing in someone’s inbox.
When former BLS Commissioner Erica Groshen led the department through the 2013 government shutdown, which lasted 16 days, then-chairman of the Federal Reserve, Ben Bernanke, called her to ask if the Fed could pay to have the jobs report released on time.
“We consulted with the Department of Labor and Office of Management and Budget and they came back with an unequivocal ‘No,’” Groshen tells Scotsman Guide. She served as commissioner until 2017. “Unlike this time, we didn’t actually know the numbers.”
BLS collects survey responses for its monthly employment report in the last week of each month, reflecting employment conditions in the middle of each month. The shutdown beginning two days before a scheduled release means September jobs data is releasable.
“We were not in a position where we could have even whispered it to him,” Groshen explains. “The BLS is in that position now because it’s two days later and everything is in and they probably have a draft of the narrative.”
Sen. Elizabeth Warren, D-Mass., a ranking member of the Senate Committee on Banking, Housing and Urban Affairs, sent a letter to William Wiatroski, acting commissioner of the BLS, and Russell Vought, head of the White House’s Office of Management and Budget, on Thursday, urging the release of the September jobs report on account of its readiness.
“Withholding this data would undermine the Fed’s ability to make informed decisions that affect every American household through interest rates, the job market, and price stability,” Warren wrote.
In a commentary written for the Fiscal Lab on Capitol Hill, a research body that analyzes congressional budgets and regulations, William Beach, former BLS commissioner during President Donald Trump’s first term, shed light on the report’s degree of readiness.
“Usually, BLS staff present the final draft of the jobs report to the commissioner on Wednesday preceding the Friday publication” — day one of this government shutdown.
