Barring a quick resolution to the partial government shutdown, the U.S. jobs report will not be released as expected on Oct. 3, leaving the Federal Reserve without one of its critical data points as officials weigh future interest rate decisions.

The shutdown has forced the Bureau of Labor Statistics, along with other federal agencies, to furlough employees while also pausing data collection and dissemination. A prolonged shutdown could also postpone the bureau's next Consumer Price Index report, a major benchmark for inflation, expected Oct. 15.

After a 0.25% rate cut in September, economists anticipated the Federal Open Market Committee would announce at least one more reduction before the end of the year. Without the BLS’ closely watched data on jobs and prices, the rate-setting committee would need to rely on private sector reports and alternative data sources.

In a Sept. 30 interview with Fox Business, Chicago Fed President Austan Goolsbee said the committee would use outside data to inform decisions if the government reports are unavailable. As of Oct. 1, the Bureau of Labor Statistics' website reads, "Updates to the site will start again when the Federal government resumes operations."

“The Bureau of Labor Statistics is the best source of data we have,” Goolsbee said. “It pains me that we wouldn’t be getting official statistics at exactly a moment when we’re trying to figure out is the economy in transition.”

A wide variety of reports inform the committee's rate decisions. In 2019, a report to the FOMC acknowledged a then-ongoing partial government shutdown's impact on data releases.

"When we do not receive economic data produced by federal statistical agencies, the model places more weight on the available information, including financial data and survey data," the report said.

The current shutdown’s effect on data releases adds new uncertainty at a moment when markets and economists were looking for signs of a rebound after months of disappointing jobs reports.

Signs of a weakening job market

The Fed's September rate cut reflected growing concern over weakness in the job market.

“I think we’re now reacting to the much lower level of job creation and other evidence of softening in the labor market,” Fed Chair Jerome Powell said Sept. 17 after the committee's two-day meeting. “...That warrants a change in policy.”

In early September, the BLS’ annual revision revealed U.S. firms hired 911,000 fewer workers over a 12-month period ending in March than previously estimated.

The revision followed President Donald Trump’s decision to fire the agency’s then-commissioner. Trump accused her of manipulating data for “political purposes” after the Labor Department reported the U.S. added a disappointing 73,000 jobs in July and revised down job gains for May and June. Experts have told USA TODAY that kind of data manipulation is virtually impossible.

U.S. hiring slowed further in August. Employers added only 22,000 jobs that month, and the unemployment rate rose from 4.2% to 4.3%, the highest level since October 2021, according to the BLS.

ADP report says private employers shed more jobs in September

ADP, a payrolls processing firm, released its monthly National Employment Report Oct. 1, which found private employers shed 32,000 jobs during September.

While job losses were widespread across industries, they were partially offset by a 33,000 gain in education and health services, the report found.

“Despite the strong economic growth we saw in the second quarter, this month's release further validates what we've been seeing in the labor market, that U.S. employers have been cautious with hiring,” Dr. Nela Richardson, an ADP chief economist, said in a statement.

Trump threatens federal layoffs

Trump has said he may lay off “a lot” of federal workers during the shutdown.

“We can do things during the shutdown that are irreversible, that are bad for them and irreversible by them, like cutting vast numbers of people and cutting things that they like, cutting programs that they like,” Trump told reporters, referring to congressional Democrats. “They’re taking a risk by having a shutdown.”

The week prior, the White House Office of Management and Budget asked agencies for plans to lay off workers rather than furlough them, as in past shutdowns.

Any additional layoffs would add to the roughly 300,000 federal workers who have already left their jobs this year from a workforce of about 2.4 million.

Contributing: Andrea Riquier, Bart Jansen

Reach Rachel Barber at rbarber@usatoday.com and follow her on X @rachelbarber_

This article originally appeared on USA TODAY: Government shutdown may delay key economic data the Fed relies on

Reporting by Rachel Barber, USA TODAY / USA TODAY

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