US Government Shutdown Disrupts Economic Data Critical to Federal Reserve

The U.S. government shutdown has halted the release of critical economic data, such as jobs and inflation reports, complicating the Federal Reserve's ability to assess the economy ahead of its October policy meeting. Chicago Federal Reserve President Austan Goolsbee expressed concerns that the absence of official statistics during this turbulent economic period makes it difficult to determine if the economy is in transition, particularly as inflation pressures persist in certain sectors. While the Fed itself will remain operational, it must rely on alternative data sources, including private sector indicators and real-time labor market forecasts, to guide interest rate decisions. Experts highlight that this data blackout comes at a precarious time, with recent hiring slowdowns fueling recession fears and inflation remaining challenging to control. Some analysts suggest the Fed may be more inclined to hold interest rates steady in October due to this uncertainty. Overall, the shutdown-induced data gap poses significant challenges for policymakers striving to navigate an uncertain economic trajectory.