Jobs report and inflation data due in October may not be released at all, White House says

The White House has indicated that key federal inflation (October CPI) and labor (October jobs) reports are unlikely to be released due to the government shutdown, potentially impairing economic data and leaving the Federal Reserve 'flying blind.' While September's jobs report is expected, the absence of October's data creates a 'fog of data' for policymakers and market participants, leading to mixed opinions on the Fed's next monetary policy moves. Fed Chair Jerome Powell suggested this data vacuum could cause the central bank to 'slow down' its decision-making, particularly for the December meeting.

Analysis

The White House has confirmed that critical federal economic data, specifically the October CPI and jobs reports, are unlikely to be released due to the government shutdown. This absence of data is projected to "permanently damage the federal statistical system" and leave the Federal Reserve "flying blind" regarding current economic conditions. While September's jobs report, with pre-shutdown data, is expected, the October data void creates significant uncertainty for policymakers and market participants.

This "fog of data" has generated mixed opinions on its impact on the Federal Reserve's monetary policy decisions. Some economists suggest the Fed may rely on private sector indicators, such as ADP's recent report showing 42,000 jobs added in October. However, this private data offers a more optimistic view compared to previous official BLS reports that indicated a "shakier labor market."

Fed Chair Jerome Powell acknowledged the situation on October 29, describing it as a "temporary state of affairs" but noting that "if you're driving in the fog? You slow down." This statement suggests the data vacuum could lead the Fed to defer or slow down critical decisions, potentially impacting the December FOMC meeting. The overall sentiment is moderately negative with an uncertain tone, reflecting the significant market impact of this data impairment.

Key Decisions for Investors

• Investors should anticipate increased market volatility and potential policy paralysis from the Federal Reserve due to the absence of key October CPI and jobs reports.
• Monitor alternative private sector economic indicators like ADP's employment report more closely, while also paying heightened attention to Fed officials' commentary for clues on their data interpretation and policy direction.
• Re-evaluate expectations for the December FOMC meeting, as the "fog of data" may lead the Fed to "slow down" its decision-making, potentially delaying further rate adjustments.