Federal shutdown cuts off economic data vital to policymakers and
investors
[October 02, 2025] By
CHRISTOPHER RUGABER and PAUL WISEMAN
WASHINGTON (AP) — The government shutdown that began Wednesday will
deprive policymakers and investors of economic data vital to their
decision-making at a time of unusual uncertainty about the direction of
the U.S. economy.
The absence will be felt almost immediately, as the government's monthly
jobs report scheduled for release Friday will likely be delayed. A
weekly report on the number of Americans seeking unemployment benefits —
a proxy for layoffs that is typically published on Thursdays — will also
be postponed.
If the shutdown is short-lived, it won’t be very disruptive. But if the
release of economic data is delayed for several weeks or longer, it
could pose challenges, particularly for the Federal Reserve. The Fed is
grappling with where to set a key interest rate at a time of conflicting
signals, with inflation running above its 2% target and hiring nearly
ground to a halt, driving the unemployment rate higher in August.
The Fed typically cuts this rate when unemployment rises, but raises it
— or at least leaves it unchanged — when inflation is rising too
quickly. It’s possible the Fed will have little new federal economic
data to analyze by its next meeting on Oct. 28-29, when it is widely
expected to reduce its rate again.
“The job market had been a source of real strength in the economy but
has been slowing down considerably the past few months,” said Michael
Linden, senior policy fellow at the left-leaning Washington Center for
Equitable Growth. “It would be very good to know if that slowdown was
continuing, accelerating, or reversing.”
The Fed cut its rate by a quarter-point earlier this month and signaled
it was likely to do so twice more this year. Fed officials said they
would keep a close eye on how inflation and unemployment evolve, but
that depends on the data being available.
A key inflation report is scheduled for Oct. 15 and the government's
monthly retail sales report is slated for release the next day.
“We're in a meeting-by-meeting situation, and we’re going to be looking
at the data,” Fed Chair Jerome Powell said during a news conference
earlier this month.
The economic picture has recently gotten cloudier. Despite slower
hiring, there are signs that overall economic growth may be picking up.
Consumers have stepped up their shopping and the Federal Reserve Bank of
Atlanta estimates the economy likely expanded at a healthy clip in the
July-September quarter, after a large gain in the April-June period.
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Financial information is displayed as traders work on the floor at
the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025.
(AP Photo/Seth Wenig)
A key question for the Fed is whether that growth can revive the job
market, which this Friday’s report might have helped illustrate.
Economists had forecast another month of weak hiring, with just 50,000
new positions added, according to a survey by FactSet. The unemployment
rate was projected to stay at a still-low 4.3%.
On Wall Street, investors obsess over the monthly jobs reports,
typically issued the first Friday of every month. It's a crucial
indicator of the economy's health and provides insights into how the Fed
might adjust interest rates, which affects the cost of borrowing and
influences how investors allocate their money.
So far, investors don’t seem fazed by the shutdown. The broad S&P 500
stock index rose slightly Wednesday to an all-time high.
Many businesses also rely on government data to gauge how the economy is
faring. The Commerce Department's monthly report on retail sales, for
example, is a comprehensive look at the health of U.S. consumers and can
influence whether companies make plans to expand or shrink their
operations and workforces.
For the time being, the Fed, economists, and investors will likely focus
more on private data.
On Wednesday, the payroll provider ADP issued its monthly employment
data, which showed that businesses cut 32,000 jobs in September — a
signal the economy is slowing. Still, ADP chief economist Nela
Richardson said her firm's report “was not intended to be a replacement”
for government statistics.
The ADP data does not capture what's happening at government agencies,
for example — an area of the economy that could be significantly
affected by a lengthy shutdown.
“Using a portfolio of private sector and government data gives you a
better chance of capturing a very complicated economy in a complex
world,” she said.
The Fed will remain open no matter how long the shutdown lasts, because
it funds itself from earnings on the government bonds and other
securities it owns. It will continue to provide its monthly snapshots of
industrial production, which includes mining, manufacturing, and utility
output. The next industrial production report will be released Oct. 17.
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