Shutdown Cripples Fed’s Data Access Amid Deep Policy Divide
The U.S. Federal Reserve is navigating one of its most precarious moments in years. Fresh off its first interest rate cut of 2025, the central bank now faces a critical dilemma: how fast to lower rates further—without reliable economic data. A federal government shutdown has suspended key reports like the monthly jobs report and the Consumer Price Index (CPI), leaving Fed officials flying blind just weeks before their next policy meeting .
A House Divided on Interest Rates
Even before the shutdown, the Federal Open Market Committee (FOMC) was split. One faction, led by dovish voices like Chicago Fed President Austan Goolsbee, argues for aggressive cuts to protect the labor market. Others warn that moving too fast could reignite inflation—especially with new tariffs from the Trump administration already pressuring prices .
“It pains me that we wouldn’t be getting official statistics at exactly a moment when we’re trying to figure out if the economy is in transition,” said Goolsbee, a voting member of the 2025 policy committee .
Missing Economic Data: What’s at Stake?
| Data Report | Status During Shutdown | Fed’s Reliance Level |
|---|---|---|
| Nonfarm Payrolls (Jobs Report) | ❌ Not published | ⭐⭐⭐⭐⭐ (Critical) |
| Consumer Price Index (CPI) | ⚠️ At risk of delay | ⭐⭐⭐⭐⭐ (Critical) |
| Producer Price Index (PPI) | ⚠️ Likely delayed | ⭐⭐⭐⭐ (High) |
| Retail Sales | ❌ Suspended | ⭐⭐⭐ (Medium) |
The “Neutral Rate” Tightrope
The Fed is trying to reach a so-called “neutral” interest rate—one that neither stimulates nor restrains the economy. But without official data, estimating this level becomes guesswork. Move too slowly, and the labor market could falter. Move too fast, and inflation could surge again due to existing tariff-driven price pressures .
- Dovish Camp: Favors rapid cuts to prevent unemployment rise.
- Hawkish Camp: Warns against premature easing amid sticky inflation.
- Chair Powell’s Challenge: Must broker consensus with incomplete information.
Alternative data sources—like private payroll reports or credit card spending trackers—may offer clues, but they lack the authority and comprehensiveness of official government statistics.
[INTERNAL_LINK:federal-reserve]
