Missing U.S. Economic Data Casts Shadow Over December Fed Decision

The prospect of recovering from the longest ever U.S. government shutdown brings relief for many federal employees and contractors, but it may not immediately clear the economic fog that has settled over policymakers and markets. Key measures of inflation and consumer spending for October and perhaps November were delayed or incompletely collected during the funding lapse, creating a data void that could matter directly to the Federal Reserve as it prepares for its December 9 and 10 policy meeting.

Morgan Stanley economists using the 2013 shutdown as a rough precedent have warned that October inflation and consumer spending releases are unlikely to reach the Fed in time, and that the unemployment and consumer price index readings for October might never be published because of partial or absent data collection. Those missing datapoints are central to the Fed s dual mandate, particularly the labor market metrics that Chair Jerome Powell has said recently have carried more weight in the committee s deliberations than inflation readings.

The practical result is that the Fed may face its December decision with a truncated picture of recent economic activity. Policy makers could rely more heavily on earlier official releases, third party high frequency indicators, and private sector estimates to gauge momentum in employment and household spending. That approach raises questions about precision and accountability, because decisions that affect interest rates and credit conditions will be made with an incomplete public record.

Statistical agencies such as the Bureau of Labor Statistics and the Bureau of Economic Analysis are responsible for the household and establishment surveys that underpin estimates of unemployment, payrolls, consumer spending, and price change. When data collection stalls, the absence is not simply academic. Missing official releases complicate the Fed s ability to validate its models, to anchor expectations in clear public statistics, and to communicate the rationale for policy moves to elected officials and the public.

The political dimensions are unavoidable. Government shutdowns stem from failures in Congress to enact appropriations, and gaps in economic reporting feed into broader narratives about institutional competence. For voters the immediate effect may be diffuse, but the consequences are tangible. Consumers and businesses make borrowing and hiring decisions based on expectations about interest rates and inflation. Uncertainty can sharpen market volatility and increase the risk premium embedded in financial conditions, which in turn can influence economic activity.

For lawmakers, the episode underscores the governance cost of impasses that halt agency operations. The disruption to data flows weakens a key link between independent policy institutions and democratic accountability. The Fed will still act on the information it deems most reliable, but the lack of timely official statistics narrows the evidentiary basis on which those actions are justified to Congress and to the public.

As agencies work to restore normal reporting, attention will turn to how the Fed weighs incomplete information against the risks of waiting for more complete verification. The answer will matter not only for the trajectory of interest rates but for the broader question of how well democratic institutions can support disciplined economic stewardship in moments of political breakdown.