What's happened
The US government did not release October inflation data due to a shutdown, complicating Federal Reserve decisions. September jobs data showed strong growth but rising unemployment, intensifying debate over interest rate cuts amid limited economic information.
What's behind the headline?
The data blackout has significantly hampered the Federal Reserve's ability to interpret the economy's health. With key reports delayed or incomplete, policymakers face a fog of uncertainty, making their decisions more cautious and divided. The September jobs report, showing 119,000 new jobs but a rise in unemployment to 4.4%, suggests a mixed labor market that complicates the inflation versus growth debate.
The absence of October inflation data, particularly the Consumer Price Index, leaves the Fed without a clear picture of current price pressures. This will likely lead to a cautious approach at the December meeting, with some officials advocating for a pause and others pushing for rate cuts. The divergence reflects deeper disagreements over whether weak hiring or persistent inflation poses the bigger threat.
Market expectations for a rate cut have fluctuated, with futures markets now assigning roughly a 50-50 chance of a cut next month. The lack of fresh data increases the risk of policy missteps, as the Fed may act on incomplete information. The situation underscores the importance of reliable data for effective monetary policy and highlights the long-term damage caused by the shutdown to the US statistical system.
What the papers say
The Guardian reports that the absence of October CPI data heightens uncertainty around the US economy, with Fed chair Jerome Powell likening guiding the economy without standard data to 'driving in the fog.' The New York Times emphasizes that the September jobs report, delayed by the shutdown, is crucial for upcoming Fed decisions, with mixed signals about the labor market. Business Insider UK notes that despite strong job growth, rising unemployment and data delays have led to market volatility and debate over whether the Fed will cut rates in December. All sources highlight the profound impact of the shutdown on economic data collection and policy planning, with some experts warning that the long-term damage to the statistical system could hinder future economic analysis.
How we got here
The US government shutdown, the longest in history, delayed key economic data releases, including inflation and jobs reports. This has created uncertainty for policymakers, especially the Federal Reserve, which relies on timely data to guide interest rate decisions. The shutdown also affected the collection of crucial statistics, raising concerns about the accuracy of available data and future reporting reliability.
Go deeper
Common question
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Will the Fed Cut Interest Rates Soon?
Many are wondering whether the Federal Reserve will lower interest rates in the near future. Recent economic data, including mixed jobs reports and delays caused by the government shutdown, have added uncertainty to their decision-making process. If you're trying to understand how these developments might affect your finances or the broader economy, read on for answers to the most common questions about the Fed's next move.
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The Federal Reserve System is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the m
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In economics, inflation is a general rise in the price level of an economy over a period of time.
When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power
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Jerome Hayden "Jay" Powell is the 16th Chair of the Federal Reserve, serving in that office since February 2018. He was nominated to the Fed Chair position by President Donald Trump, and confirmed by the United States Senate.
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The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics and serves as a principal agency of the U.S.