The White House says the layoffs are imminent on government shutdown
Spokesperson Caroline Leavbit says that as the nation enters partial government shutdown, layoffs for federal workers could begin imminently.
The government closure delayed the Labor Statistics Bureau’s employment report. According to Bank of America’s Global Research Economist, “arguably the most important information” for the Federal Reserve to review before meetings at the end of the month.
The employment report was released on October 3rd. However, the federal government shutdown forced the department to oust its employees and suspended data collection and spread. If the shutdown remains, it could also postpone the Bureau’s next consumer price index report, the main benchmark for inflation expected on October 15th.
The release of BLS is widely seen as a gold standard in economic data, but the Fed and economists rely on a wide range of reports to measure economic health.
“At this point, it’s an incomplete picture, but we’re not completely blind,” Mike Skordeles, head of American Economics at Truist, told USA Today. “Clearly, if the shutdown is drugged for longer than a week, that old data makes it difficult to get an accurate economic situation.”
“About 50,000 jobs have been added to the salary rate, with the unemployment rate remaining at 4.3%,” Bankrate senior economic analyst Mark Hamrick said in a memo on October 3.
The data delay comes when economists were looking for signs of rebound in the job market after months of disappointing reports, and when the Fed is expected to announce at least one additional fee cut by the end of the year to stimulate growth.
What other data can an economist consider?
In 2019, a report to the Federal Open Market Committee acknowledged the impact on the release of the massive government closures of the time, saying that “models put more weight” if BLS data is not available.
Still, not having a BLS employment report is “a huge deal,” according to Jobs’ Jobs for future CEO Maria Flynn, who served as a senior Labor Department official between Clinton and the Bush administration.
“We’ve been here before, and that’s very rare,” Flynn said. “I think the fact that it’s happening when I see the role of the Bureau of Labor Statistics is politicized in a way I have never seen personally.
Without new government data, Flynn said companies could rely on reports from job boards such as Zip Recruiter, Endall and LinkedIn, as well as data from LightCast, a real-time labor market information provider.
There are other releases that economists are keeping an eye on, like the ADP’s National Employment Report, which was released on October 1st and announced 32,000 jobs in September.
Skordeles said some private source economists include freight data from ports and railroads, industry group data from organizations such as the National Association of Realtors, and revenue reports from public companies.
The September Main Street Health Report on Homebase’s Small Business Work Trends found that workforce participation fell by 3.6% and working hours fell by 4.7%, closely reflecting the late-late 2023 decline. Meanwhile, HomeBase CEO John Waldmann focuses primarily on small businesses that employ hourly workers.
“We started publishing data during Covid because we were seeing real-time signals early in the pandemic of impact on the local economy, so we were trying to raise alarms everywhere,” Waldmann said. “Small businesses have traditionally provided a large portion of the employment growth in this country. Looking at the changes in technology and labor market before us, I think their role in providing employment in this country will only become more important.”
Why economists are still waiting for government data
Sometimes non-governmental reports are inconsistent with each other, causing the absence of BLS data to be a challenge, Flynn said.
“It’s always good to be able to triangulate the data and compare and contrast between sources of differences,” Flynn said. “If you’re taking one foot out of the equation and it’s the leg of a public sector government sponsored stool, I think it’s starting to open things up for more interpretation.”
According to Skordeles, government-supported data is often available and is the only source of information for others.
“There aren’t many comprehensive inflation data series other than pricing statistics for narrow slices of the economy, such as automated data from Mannheim and existing home prices in NAR,” added Skordeles.
The closure period is unknown, but the longest in US history lasted for 35 days. Flynn pointed out that if economists had no government data for more than three months, they could fundamentally change some of the credibility of the assumptions and decisions behind the analysis.
She added job reporting issues to everyday Americans to inform the Fed’s interest rate decisions and help influence loans, credit cards and other borrowing costs. It also highlights “the important role that federal statistical agencies play in guiding our economy.”
“If they or someone in their family are looking for another job, they need information that really helps them make those decisions about their best next steps,” Flynn said. “Having government-supported data is an important part of that puzzle.”
Contact Rachel Barber at rbarber@usatoday.com and follow her at x @rachelbarber_
