With the record 43-day U.S. government shutdown now over, officials and investors are digesting an unprecedented consequence: October’s core macro data may never fully exist. The White House has warned that the October jobs and CPI reports are likely permanently impaired because Bureau of Labor Statistics staff were furloughed and could not conduct the household survey or collect normal price data, as detailed by Fortune’s shutdown coverage.
That gap leaves the Federal Reserve heading into its December 10 meeting without a clean read on the labor market or inflation at a moment when officials are deeply divided about further rate cuts. Market pricing for a December cut has slipped to roughly 50%, and several regional Fed presidents have signaled discomfort with easing amid sticky underlying inflation metrics. The loss of official data also makes it harder for businesses and households to gauge the true state of the economy, magnifying the role of private indicators and anecdotes.
Those private gauges are flashing more yellow than green. UBS and other forecasters cite rising layoff announcements, longer unemployment spells, falling job openings and weak holiday hiring plans as signs the labor market “doesn’t look that good” beneath a still-low headline jobless rate. The Associated Press describes a “no hire” job market in which unemployed workers face the slowest pace of hiring in more than a decade, while the University of Michigan’s consumer sentiment index has dropped near record lows, with particular stress among lower-income households.
The combination of shaky labor dynamics and missing federal data heightens the risk of a policy misstep: keeping rates too high for too long could tip a weakening jobs market into outright contraction, but cutting too aggressively could entrench inflation that remains elevated on many components of the CPI basket. For investors, the data fog is feeding volatility in both bonds and equities and is one reason risk assets have become more sensitive to every Fed speech and every private survey release.
