The Federal Reserve is Data-Dependent. What if There’s No Data?
Author: Greg Valliere
September 26, 2023
BIDEN ADMINISTRATION OFFICIALS have confirmed that the Bureau of Labor Statistics would not report the September jobs report on Oct. 6 and September inflation data on Oct. 12. Also jeopardized would be the initial third quarter GDP data.
THIS WOULD COME AT A SENSITIVE TIME FOR THE FED, which has been leaning toward a rate increase late this year, based on its concern that inflation has not gotten to its goal of 2%. Yet the central bankers see increasing headwinds for the overall economy and probably would be forced to stand pat if a shutdown lasts for weeks.
THIS IS JUST ONE OF MANY ISSUES that will arise if there’s a shutdown this weekend; close to a million workers would be laid off and a wide range of federal programs would be jeopardized, including food assistance under the Women Infants and Children program, which would affect at least 7 million recipients.
HUGE PROGRAMS LIKE SOCIAL SECURITY AND MEDICARE would continue to operate, as would funding for the Pentagon, but it’s unclear whether a budget deal will increase aid to Kyiv. Ukrainian troops have been advancing in recent weeks, but a lengthy delay in more U.S. aid could be a morale-buster.
SOME FEDERAL WORKERS would not be furloughed in a shutdown, but many workers — such as Transportation and Safety Administration (TSA) employees — would not be paid. (Members of Congress would continue to get paid.)
A LAST-MINUTE “KICK THE CAN” compromise is possible, but we’ll stick with our odds that there’s a 75% chance of a shutdown. Prospects weren’t helped yesterday when Donald Trump urged Republicans to shut the government down unless they get everything they want in negotiations. The GOP always loses the shutdown blame game, and this time will be no exception, since this fight is almost exclusively among Republicans.
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