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.

A key second-order risk of the government shutdown is the halt of incoming economic data. This data blackout impairs the Federal Reserve's ability to make informed monetary policy decisions, creating significant uncertainty for investors and the broader economy ahead of key meetings.

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.

The most significant danger of a prolonged government shutdown is the disruption to federal statistics. This creates an "unsettling" lack of visibility for policymakers, potentially causing them to miss a critical economic downturn and delay a necessary response. The direct GDP impact is often recoverable later.

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.

A key indirect risk of a shutdown is the delay of vital data releases on labor and inflation. This forces investors and the Fed to operate in an information vacuum, increasing uncertainty and the potential to overreact to anecdotal signals, creating outsized market effects.

The BLS assumed 0% October inflation for 88% of the CPI basket due to the government shutdown. This creates a false signal of rapidly cooling inflation and will distort year-over-year data for the next 12 months, rendering the report effectively "junk."

Critical economic data from household surveys, such as the monthly unemployment rate, will likely be lost forever for October due to the government shutdown. Unlike business data, household surveys cannot be conducted retroactively because of 'recall bias'—people simply cannot accurately remember their precise employment situation from weeks prior.