On October 24 local time, the White House warned that the Bureau of Labor Statistics (BLS) might be unable to release the October Consumer Price Index (CPI) data as planned due to the ongoing government shutdown. If true, this would be the first time since the index was established that inflation data has been absent—a historic event.
The US government shutdown has entered its fourth week. Senate Democrats have repeatedly rejected temporary spending bills, citing concerns that Medicare would not be extended. The subsidy terms will reject funding measures. The funding shortage has forced a large number of federal employees to take leave, including Bureau of Labor Statistics staff involved in price surveys.
The White House stated on social media that BLS investigators were unable to conduct on-site price collection because Congress failed to pass funding, "and we are therefore unable to obtain critical data." White House Press Secretary Carolyn Levitt added that this could throw businesses, markets, households, and the Federal Reserve into disarray.
Data acquisition interrupted
Traditionally, the Bureau of Labor Statistics is required to collect and verify the prices of thousands of goods and services each month during the statistical period. However, with government funding frozen, most investigators are unable to access actual workplaces, resulting in a gap in the statistical system.
Industry analysts say that if price collection is halted for an entire month, it means there is a lack of a calculable sample. Even if the government resumes operations in early November, it is almost impossible to complete the re-collection of price information in a short period of time.
Compared to price surveys, releasing employment data might be slightly more feasible. Experts explain that companies typically have their own hiring and dismissal records, and even if there are delays, they can rely on administrative data for correction; however, inflation data depends on on-site sampling, and once interrupted, it cannot be traced back.
Market observers believe that this "information vacuum" will leave businesses without pricing references, make it difficult for investors to judge price trends, and for policymakers, the partial failure of the economic "dashboard" will bring greater uncertainty.
Oxford Economics analysis suggests that the stagnation in price collection means policymakers are “in an information blind spot” when assessing inflation trends, which will make monetary policy formulation more complex.
The Federal Reserve's decision-making has become more difficult.
Meanwhile, the Federal Reserve is about to hold its penultimate interest rate meeting of the year. September CPI data shows that inflation remains moderate: overall CPI rose 3.0% year-on-year and 0.3% month-on-month; core CPI rose 0.2% month-on-month and 3.0% year-on-year.
However, if the October report is absent, the Fed's December meeting will lose a key inflation reference, making the decision-making process more difficult.
Analysts believe that the lack of price data not only weakens market judgment on the path of inflation, but may also force the Federal Reserve to make interest rate decisions in a "blind" manner.
Deutsche Bank In its latest client memo, Deutsche Bank stated that the lack of key inflation and employment data will create "greater uncertainty" for markets and policymakers.
Some economists warn that continued disruptions to inflation and employment data could dampen market confidence. Deviations in business and consumer expectations could amplify financial market volatility and cause delays in the transmission of monetary policy.
(Article source: CBN)
