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.
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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.
The true purpose of a budget is not to limit spending or perfectly predict outcomes. Its value lies in creating a baseline for comparison. Analyzing why actual results differ from the budget provides critical insights for strategic adjustments, turning it into a tool for understanding, not judgment.
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.
Shutdowns halt the release of key data like jobs reports and inflation figures. This obstructs the Federal Reserve's ability to make informed interest rate decisions, creating market uncertainty. It also delays Social Security COLA calculations, impacting millions of retirees who rely on that data.
Unlike most countries that fund legislation upon passing it, the U.S. Congress passes laws first and separately debates funding later. This fundamental disconnect between approving work and approving payment is a structural flaw that repeatedly manufactures fiscal crises and government shutdowns.
Former BLS Commissioner Erica Groshen argues the agency's automated process makes it nearly impossible to manipulate a single report. The real danger is systemic change, like converting career civil servants into political appointees who can be fired, gradually eroding the agency's culture of impartiality.
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 recent White House memo indicates that employees in departments reliant on discretionary funding could be permanently dismissed, unlike typical shutdowns where workers are furloughed and retain jobs. This introduces a new, more severe labor market risk that could negatively impact the dollar.