USA in statistical darkness

The federal government shutdown in the United States not only paralyzes the functioning of government agencies, but also has a significant impact on the flow of information that is vital to the economy. If ministries and statistical agencies – such as the Bureau of Labor Statistics, the Bureau of Economic Analysis, and the Census Bureau – suspend their activities, the publication of macroeconomic data will also stop. This means that markets, analysts, and the central bank itself are losing key indicators on which monetary and fiscal policy decisions are based.

Without data on inflation, unemployment, GDP growth, or retail sales, the economy is literally left in the dark. Financial markets lose their guide to economic developments, which increases the volatility of stock, bond, and currency prices. Investors react more to estimates and speculation than to facts, and market expectations can quickly diverge from reality.

This also complicates the work of foreign partners, companies that trade with the US, and multinational institutions such as the International Monetary Fund, the World Bank, and the OECD.

For the Fed, the data gap is a major problem. Monetary policy is based on regular assessments of inflationary and real trends in the economy. Without fresh data, interest rate decisions become more uncertain and the Fed may either unnecessarily risk tightening policy too much or, conversely, underestimate inflationary pressures. In the short term, the situation can be remedied by using alternative sources, such as private surveys or high-frequency data from financial markets, but these can never fully replace official statistics.

The suspension of data publication also has practical implications. Companies are losing track of developments in demand and inflation, state and local governments do not have up-to-date data for budget planning, and the United States' foreign partners lack a reliable picture of the performance of the US economy. A prolonged information blackout could thus damage not only economic policy management, but also confidence in the institutional stability of the US – which is perhaps the most serious damage of all for the world's largest economy.