Gov't Shutdown Could Impact Upcoming Data Releases

Chair Powell was asked at this week's FOMC whether a looming government shutdown would impact the release of data that the Fed will rely upon as it makes monetary policy decisions at upcoming November and December meetings.

• He responded: "It's possible. If there is a government shutdown and it lasts through the next meeting, then it's possible we wouldn't be getting some of the data that we would ordinarily get and we would just have to deal with that. And I don't know. It's hard for me to say in advance how that would affect that meeting. It would depend on all kinds of factors that I don't know about now. But it's certainly a reality that that's a possibility."
• Expect speculation on this to pick up in the remaining days leading up to what looks like a very likely federal gov't shutdown starting on October 1.
• JPMorgan notes that this could impact nonfarm payrolls / CPI / GDP. They see potential for this shutdown to be "more disruptive for the data flow than the shutdown in 2018/2019, because in that earlier instance Congress still allowed funding for the BLS, which allowed the CPI and employment reports to be released on their normal schedules."
• JPM notes that the September data may not be badly disrupted, since the data collection will have been taken place, but the release may be delayed (payrolls on Oct 6, CPI Oct 12), and it could interrupt data collection for the October reports and beyond if the gov't shutdown takes place in the usual survey weeks.
• "Once the government reopened, it would take some time to process and disseminate the data, as was the case in 2013. In that episode, the 16-day shutdown delayed the release of both the September employment and CPI reports by about two weeks to allow for processing of the relevant data once the government reopened, even though data collection had been completed."