MW No jobs report on Friday. But that may not be the worst data delay due to federal shutdown.

By Jeffry Bartash

A long shutdown could imperil the CPI inflation report and render the Fed partly blind

The government shutdown has put hundreds of thousands of people out of work.

Crucial reports on U.S. inflation, job creation and unemployment are set to be delayed a week or more due to the government shutdown - and there's even a danger that some inflation reports might not be produced at all.

The absence of these reports comes at a sensitive time for Wall Street and the Federal Reserve.

The U.S. labor market has taken a turn for the worse since the late spring, spurring the Fed to cut interest rates a few weeks ago for the first time this year. At the same time, inflation has crept higher, and the Fed has to be mindful of that as it weighs when to lower borrowing costs again.

Senior Fed leaders were expecting to see reports on employment and consumer inflation before they meet again Oct. 28-29 to consider another rate cut.

Now it's unclear what they will see - and when.

The release of these economic reports will naturally depend on how long the government shutdown lasts. The longer it goes on, the bigger the delay - or worse.

Let's start with the September employment report, which was due to be released Friday morning. Economists were expecting a small increase of 51,000 jobs.

The Bureau of Labor Statistics, the agency in charge of the report, had already completed nearly all of the work before the shutdown began. As a result, the jobs report can be published very quickly once the BLS reopens.

Using the 16-day federal shutdown in 2013 as a guide, the agency was able to publish the delayed jobs report just three business days after government workers were back on the job.

The September consumer-price index, the main U.S. inflation barometer, would experience a longer delay if the shutdown goes well into next week. The CPI is bigger and more complicated to produce than the employment report.

The most recent CPI is due to be published on Oct. 15.

In 2013, the delayed September CPI was published on Oct. 30, or two weeks after it was originally supposed to come out.

What if the latest Washington standoff lasts more than 16 days? That's when things get tricky, especially for the October employment and CPI reports.

A long shutdown beyond three weeks would delay the October jobs report beyond its Nov. 7 publishing date.

The jobless rate would also see a temporary boost close to 5% in October, from the current 4.3% level, as hundreds of thousands of furloughed federal workers would be classified as unemployed.

The unemployment rate, however, would then fall back toward normal in the following month.

The bigger danger to the economic data from a long shutdown would be no October CPI at all.

If the government were still closed after Oct. 24, economists say, it would make it virtually impossible to collect enough data to determine the rate of inflation in the month.

The Fed wouldn't see a CPI, a producer-price index $(PPI)$ or a pesonal-consumption expenditures (PCE) index for October - leaving it in the dark about the latest trends in inflation.

What would it mean for the broader U.S. economy? History says not much.

"Government shutdowns create data disruptions, not economic ones," economists at RBC wrote in a note to clients.

Yet this time could be different if a government shutdown drags on much longer than expected, adds to cracks in the economy and raises the danger of a Fed misstep.

The economy is already struggling to adapt to ever-changing U.S. tariffs, for one thing. Businesses have also cut back on hiring and investment, causing the labor market to weaken and keeping consumer confidence low.

"The risk of slower growth stems from reduced visibility into the economy in an already uncertain period, and less so from the shutdown itself," the RBC economists said.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 02, 2025 16:25 ET (20:25 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.