Trying to put America's economic puzzle back together
The government shutdown has come and gone (for now). But the past several weeks had economists spinning their wheels. We are always faced with the same challenge as that of solving a jigsaw puzzle – attempting to assemble pieces of data and information in order to making sense of how the economy is performing. This is our picture on the top of the puzzle box. In the midst of the economic crisis a few years ago, many of the economic puzzle pieces were upside down and didn’t appear to fit. We had a very murky understanding of what the top of the box -- the economic outlook – was going to be, but we had regular reporting of data by government agencies.
Enter October, when economists couldn’t get access to several missing pieces of that puzzle thanks to the government shutdown, the first one in 17 years. Key economic reports that went unreported include employment, retail sales, and inflation. Overall, there are at least 12 reports that have not been released since Oct. 1. This means there will not be a Monthly Economic Review for NRF members in October.
Now that the government has reopened, the ultimate timing of these releases will vary based on each agency and the timing needed to compile and construct the report. A key question other than the timeliness of the releases is whether or not the delay will have an impact on the quality of the data to be collected. For example, the September employment report that should have been released on October 4th has already been collected. Once the Bureau of Labor and Statistics opens its operations, there is only a limited amount of time for the report to be released for it to still be considered accurate.
However, the household employment survey for October, which is scheduled to be completed this week, probably won’t be conducted this week. It is likely that because these interviews - data on the labor force, which includes those who are employed and unemployed - are being delayed, the quality of information gathered will be in question.
So not only is the assembly of the economic puzzle perplexing, but we are also in a situation when forecasts are most needed because of the high level of uncertainty. It is too early to assess the impact that the battle consuming Washington will have on the economy as a whole, but the shutdown and uncertainty surrounding fiscal policy, and the subsequent hit to business and consumer confidence, will have a negative impact on economic growth over the next six months.