September Jobs Report Will Come Out on Nov. 20

Key Concepts

• Government Shutdown: A period when non-essential government operations cease due to a failure of Congress to appropriate funds.
• Economic Data Releases: Official statistics and reports on the state of the economy, such as jobs reports, inflation rates, and unemployment figures.
• Data Quality and Reliability: Concerns about the accuracy, completeness, and trustworthiness of economic data, especially after disruptions.
• Household Survey vs. Payroll Survey: Two different methods for measuring employment. The household survey informs the unemployment rate, while the payroll survey (establishment survey) measures job growth.
• Stagflation: An economic condition characterized by slow economic growth, high unemployment, and rising prices (inflation).
• Inflationary Pressures: Factors that contribute to an increase in the general price level of goods and services.
• Tariffs: Taxes imposed on imported goods, which can affect prices and economic growth.
• Immigration Policy: Government policies related to the movement of people into a country, which can have economic implications.

Aftermath of the Longest Government Shutdown and its Impact on Economic Data

This discussion focuses on the significant disruptions caused by the longest government shutdown in US history, particularly its impact on the release and quality of economic data. Gene Sperling, President of Sperling Economic Strategies and former senior economic adviser to multiple presidents, provides his perspective on the "fog" surrounding economic indicators and the potential long-term consequences.

Delayed and Incomplete Data Releases

• Missed Data Points: The speaker notes that a substantial number of data releases were missed during the shutdown, estimating at least 43.
• Specific Examples of Delays:
  • The September jobs report, originally scheduled for October 3rd, was delayed until November 20th.
  • The October jobs report, expected the previous Friday, had not yet been released at the time of the discussion.
• Concerns about Data Completeness: There are significant questions about whether the data that is eventually released will be complete, with the possibility that only parts of surveys might be available. The collection efforts during the shutdown are unclear, leading to uncertainty about the actual data gathering process.

Questions Regarding Data Quality and Reliability

• "Fog" of Uncertainty: The economic data landscape is described as being in a "fog" due to the delays and potential incompleteness. This lack of timely and reliable information creates uncertainty for economic analysis and decision-making.
• Historical Precedent: Sperling recalls the 2013 government shutdown, where data was also delayed, but the releases generally occurred within a timeframe similar to the shutdown's duration. The current situation appears more severe.
• Divergent Data Sources: The potential for the household survey (which determines the unemployment rate) to be permanently unavailable is highlighted, citing a suggestion from Kevin Hassett, former Chairman of the Council of Economic Advisers. This contrasts with the payroll survey, which might still be released.
• Private Sector Data Discrepancies: The reliability of private sector data is also questioned. For instance, ADP data suggested job gains of around 40,000 in October, while a new weekly index from the same source indicated a potential loss of 10,000 jobs by the end of October. This inconsistency adds to the confusion.

Impact on Monetary Policy and Economic Outlook

• Federal Reserve's "Driving Slower": Chairman Powell's analogy of "driving slower" when in a fog is invoked to explain why the Federal Reserve might be less confident about interest rate cuts, such as a potential cut in December. The lack of clear economic data hinders confident policy adjustments.
• Administration's Policies and Stagflation Concerns:
  • Stagflation Theory: The administration's policies, specifically immigration and tariffs, are seen as potentially contributing to stagflation.
  • Negative Inflationary and Growth Effects: Both immigration and tariffs are described as having negative inflationary effects and simultaneously hurting economic growth. This creates a difficult trade-off for policymakers.
  • Tariffs and Inflation: Tariffs are considered more likely to sustain inflationary pressures. While large retail stores may be absorbing some of these costs, leading to a slower initial impact, the underlying inflationary trend is expected to persist.
  • Inflation Rate: The economy was projected to have a 2% inflation rate in January, but it has risen to 3%.
  • Supreme Court Uncertainty: The potential impact of Supreme Court decisions adds another layer of uncertainty to the economic outlook.
  • Gradual Price Increases: There is a strong reason to believe that large retailers will continue to gradually increase prices over the next several months.

Key Arguments and Perspectives

• Sperling's Perspective: Sperling expresses significant concern about the lack of clarity and the potential for long-term damage to data integrity. He emphasizes the difficulty in making informed economic decisions when the foundational data is compromised.
• Hassett's Suggestion: The idea that the household survey might never be released is a critical point, as it directly impacts the understanding of unemployment.
• Powell's Caution: Chairman Powell's statement underscores the Federal Reserve's cautious approach in uncertain economic environments.
• Critique of Administration's Policies: The discussion implicitly criticizes the administration's policies (tariffs and immigration) for creating economic headwinds and contributing to inflationary pressures.

Logical Connections Between Ideas

The discussion flows logically from the immediate impact of the government shutdown on data releases to the broader implications for economic analysis, monetary policy, and the overall economic outlook. The delayed and potentially incomplete data (Section 1) directly leads to questions about data quality and reliability (Section 2). This uncertainty, in turn, influences the Federal Reserve's policy decisions (Section 3) and exacerbates concerns about the economy's trajectory, particularly in relation to stagflationary pressures stemming from administration policies (Section 3).

Conclusion/Synthesis

The longest government shutdown has created a significant "fog" around economic data, characterized by delayed, incomplete, and potentially unreliable information. This uncertainty poses challenges for economic analysis, monetary policy, and business decision-making. The administration's policies, particularly tariffs, are seen as contributing to inflationary pressures and potentially hindering growth, further complicating the economic landscape. The long-term consequences for the integrity of economic data and the ability to accurately assess the economy remain a significant concern.