Things you need to know about government closures on the first day from Capitol Hill
According to a USA Today Congressional Reporter, once the government shutdown enters the first day, there are no signs of sprouting on either side of the aisle.
Apart from a quick resolution to partial government closures, the Federal Reserve will leave any of the key data points as the US employment reports will not be published as expected on October 3rd and are considering future interest rate decisions.
The closure forced the Bureau of Labor Statistics, along with other federal agencies, to oust its employees, while suspending data collection and dissemination. The long-term shutdown could also postpone the Bureau’s next consumer price index report, the major benchmark for inflation expected on October 15th.
After a 0.25% interest rate cut in September, economists predicted that the Federal Open Market Committee would announce at least one cut by the end of the year. Without data on which BLS is closely monitored on employment and pricing, the pricing committee must rely on private sector reports and alternative data sources.
In an interview with Fox Business on September 30, Chicago Federal President Austan Gursby said the committee will use external data to notify them of decisions if government reports are not available. As of October 1, the Bureau of Labor Statistics website states, “It will start again once the federal government resumes operations.”
“The Bureau of Labor Statistics is the best source of data we have,” Ghoolsby said. “It’s painful not to get official statistics at the moment we’re trying to understand that we’re a transitional economy.”
A wide variety of reports will inform the committee’s fee decision. In 2019, a report to the FOMC acknowledged the impact of the then large-scale government closure on data releases.
“If we do not receive economic data generated by federal statistical agencies, this model places more weight on available information, including financial and research data,” the report states.
The impact of the current shutdown on data releases adds new uncertainty to the moment when markets and economists were searching for signs of rebound after months of reporting disappointing jobs.
Signs of weakening the job market
The Fed’s September cuts reflect growing concerns about weaknesses in the job market.
“I think we are currently responding to much lower levels of job creation and other evidence of softening in the labour market,” Chairman Jerome Powell said on September 17th after a two-day meeting of the committee. “…it guarantees policy changes.”
In early September, an annual revision of the BLS revealed that US companies employed 911,000 workers over the 12 months that ended in March than previously estimated.
The revision follows President Donald Trump’s decision to fire the agency’s then-command. After the Labor Bureau reported in July that the US added 73,000 jobs and revised jobs in May and June, Trump accused them of manipulating data for “political purposes.” Experts tell USA Today that manipulation of the types of data is virtually impossible.
In August, employment in the US was even slower. According to BLS, employers added 22,000 jobs that month, with the unemployment rate rising from 4.2% to 4.3%.
Private employers reduced more employment in September, according to the ADP report.
ADP, a salary processing company, released its monthly national employment report on October 1st.
Job losses were widespread throughout the industry, but were partially offset by an increase of 33,000 in education and health services, the report found.
“Despite the strong economic growth we saw in the second quarter, this month’s release examines further what we’ve seen in the labor market. We verify that US employers are cautious about employment.”
Trump threatens federal layoffs
Trump said he might fire “many” federal workers during the closure.
“We can do things that are irreversible during the closure, bad and irreversible for them. They cut out huge numbers of people, cut out the programs they like, cut out the programs they like,” Trump told reporters, referring to Congressional Democrats. “They take risks by shutting down.”
Like past closures, the White House Business and Budget Office has asked its agents for plans to fire workers rather than banish them.
Additional layoffs add to around 300,000 federal workers who have already left their jobs this year, from around 2.4 million workers.
Contributors: Andrea Leikier, Bad Jansen
Reach Rachel Barber at rbarber@usatoday.com Follow her at x @rachelbarber_
