---
title: "The Federal Reserve is trapped in a \"data black hole\": the government shutdown leads to the absence of key economic data, and the divergence in the interest rate cut path in December may intensify"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/264886300.md"
description: "Due to the U.S. government shutdown, the Federal Reserve made its latest interest rate decision without key economic data, making future decisions potentially more complex. The national employment report has been interrupted for two months, raising questions about the reliability of the data, and economists are concerned that some data may not be released. This uncertainty may exacerbate divisions among Federal Reserve officials, especially in the context of ongoing inflation risks. Although Powell has pushed for a consensus on rate cuts, the decision in December will face more challenges"
datetime: "2025-11-07T13:35:05.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/264886300.md)
  - [en](https://longbridge.com/en/news/264886300.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/264886300.md)
---

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# The Federal Reserve is trapped in a "data black hole": the government shutdown leads to the absence of key economic data, and the divergence in the interest rate cut path in December may intensify

According to the Zhitong Finance APP, due to the impact of the U.S. government shutdown, Federal Reserve officials made their latest interest rate decision without key economic data. The data obtained after the government resumes operations may not make the next decision any easier.

Due to the shutdown of federal agencies that release economic data, the national employment report has been interrupted for two months, and this Friday will mark the second month without the report. Even if the government quickly restarts, the data released afterward will be based on retrospective surveys, significantly undermining its reliability.

Economists indicate that as time goes on, some employment and price data for October may not be released at all. This uncertainty will prolong the debate among Federal Reserve officials—whether the labor market is truly weak enough to support another rate cut in December amid ongoing inflation risks. Officials already have differing views on this issue.

"This may exacerbate the divisions," said Michael Reed, senior U.S. economist at RBC Capital Markets, "the quality of government data will be called into question."

Despite the data scarcity caused by the shutdown, Federal Reserve Chairman Jerome Powell successfully pushed the Federal Open Market Committee (FOMC) to reach a consensus on a rate cut at the end of October. However, he quickly warned that doing so again in December would not be so simple.

Subsequently, several policymakers reinforced this warning in public statements—they rarely indicated their preferences for the next decision nearly six weeks in advance.

In October, Federal Reserve officials had the latest inflation data but lacked the latest employment report. Assuming the government shutdown ends before then, they may face the opposite situation at their meeting on December 9-10.

Theoretically, this would help determine the appropriate course of action, as Powell has focused the December debate primarily on the true state of the labor market. The significant slowdown in hiring this summer raised concerns about overly tight monetary policy, which also drove the rate cuts in September and October.

Powell stated on October 29, "For some members of the committee, now may be the time to pause and see if there are indeed downside risks in the labor market."

However, the October employment report, originally scheduled for release on Friday, will be filled with uncertainty—including to what extent the rise in the unemployment rate is due to federal government workers being temporarily furloughed. This will complicate data interpretation. Some economists suggest that the key unemployment rate data for the Federal Reserve may not even be released at all.

This is because the report references data from the week including the 12th of each month, based on two surveys conducted by the Bureau of Labor Statistics (BLS): one is a survey of businesses that yields the core non-farm payroll data; the other is a survey of households used to calculate the unemployment rate.

Although employers may retain wage data and typically report online themselves, tracking respondents (through face-to-face and phone interviews) may be more difficult, as they need to recall their employment status during that week "The longer the time drags on, the less reliable the respondents' answers become," said Andrew Hasbrouck, senior U.S. economist at BNP Paribas, in a recent report to clients. "We believe that to a certain extent, the Bureau of Labor Statistics may choose to abandon collecting data for October and instead focus on November data, which means the October unemployment rate may never be published."

## New Controversy

Even if the report is eventually released and includes unemployment rate data, distinguishing potential trends from the one-time effects of the shutdown will become a new point of contention. The Congressional Budget Office (CBO) stated that if approximately 650,000 furloughed federal employees are all counted as temporarily unemployed, the unemployment rate would rise by 0.4 percentage points.

As the shutdown enters its sixth week, economists say that the Bureau of Labor Statistics is also increasingly likely to be unable to release the October Consumer Price Index (CPI)—a data point that largely relies on field visits to businesses across the country. Previously, to facilitate the Social Security Administration's annual cost-of-living adjustment, relevant agencies had recalled staff to release the September CPI, but no other reports have been issued since the government shutdown began on October 1.

With doubts about the credibility of employment data and a complete absence of inflation data, officials more concerned about the state of the labor market will continue to push for further rate cuts, while those more worried about price pressures will advocate for a pause in rate cuts, leading to a stalemate. According to futures contracts, investors still believe the former will prevail, with a likelihood of over 50% for a rate cut in December.

Analysts Stuart Paul, Andrei Sokol, and Huang Anna stated: "As the U.S. government shutdown enters its second month and the employment report has yet to be released, we have constructed a labor market index using available alternative labor-related data... This index shows that the U.S. labor market continues to cool, but the pace of cooling has slightly slowed."

Proponents of rate cuts can cite the widely watched private sector hiring data released by ADP—this data showed on Wednesday that job growth in October remained weak and was primarily concentrated in the education and healthcare sectors.

On the other hand, Federal Reserve officials have also mentioned weekly unemployment claims data—this data is still being reported by state governments during the shutdown and has not shown significant growth.

Meanwhile, due to the relative scarcity of alternative private sector data, it is even more difficult to substitute for government-released inflation data.

In the absence of official data, investors in the $29 trillion U.S. Treasury market also found themselves in a similar predicament this week—data released by ADP, Challenger, Gray & Christmas Inc., and Revelio Labs led to fluctuations in yields in different directions.

Ed Hussein, portfolio manager at Columbia Threadneedle Investments, stated that these conflicting data highlight the tricky situation faced by all parties involved. "The gold standard remains the unemployment claims data and the official unemployment rate," Hussein said

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