The recent government shutdown will create a permanent void in crucial economic data for October. While statistics like payrolls might be collected retroactively, survey-based data such as the Consumer Price Index (CPI) and household unemployment figures are likely lost forever due to recall bias, creating a black hole in the historical record.

A shutdown doesn't just delay data reports; if it extends into mid-month, it prevents the government from conducting the surveys needed for future reports. This disrupts the entire data collection pipeline, causing a ripple effect that can obscure economic trends for months after the government reopens.

Beyond budget cuts, a major threat to data reliability is a staffing crisis at the Bureau of Labor Statistics, where one-third of senior leadership positions are vacant. This loss of experienced personnel erodes institutional knowledge and resilience, increasing the risk of un-caught errors.

Unlike the 2018 shutdown, the Bureau of Labor Statistics may not have funding this time, potentially halting the release of non-farm payrolls and CPI data. This would leave the highly data-dependent Federal Reserve and markets "flying blind" at a critical monetary policy juncture.

Declining real-term funding at agencies like the BLS creates a hidden cost. To ensure core reports are released on time, staff are pulled from long-term modernization projects, compromising the agency's ability to keep up with a changing economy.

Despite official CPI averaging under 2% from 2010-2020, the actual cost of major assets like homes and stocks exploded. This disconnect shows that government inflation data fails to reflect the reality of eroding purchasing power, which is a key driver of public frustration.

Former BLS Commissioner Erica Groshen explains that data revisions are a designed feature, offering users a choice between fast but less precise initial data and slower but more accurate final data. It's an intentional balance between timeliness and accuracy.

The Federal Reserve is not 'flying blind' during government shutdowns that halt official statistics. It uses a composite of alternative indicators for the labor market and inflation, providing enough of a signal to stick to its pre-planned policy path, such as proceeding with scheduled interest rate cuts.

A key but overlooked issue with the Consumer Price Index (CPI) is the deteriorating quality of data imputation. An increasing percentage of missing data points are being filled using less-similar items ("different cell" imputation). This degradation in methodology introduces a hidden risk to the reliability of the headline inflation numbers.