Uncertainty rises as US government shuts down

The US federal government has shut down following congress’ failure to agree on a spending bill.
The shutdown will see essential services, including military personnel, air traffic controllers and TSA officers, working on an unpaid basis.
In contrast non-essential federal services will cease activity altogether, with somewhere in the region of 750k workers in these agencies being furloughed.
The shutdown marks the first since the end of 2018, when the federal government remained shuttered for a period of 35 days. The economic impact of that shutdown was negligible on an aggregate basis.
The bigger issue during the latest shutdown centers on the impact on statistical agencies, most notably the Bureau of Labor Statistics (BLS), which will not continue collecting or publishing data, meaning that important statistics used by policy makers will be delayed.
This poses a difficult situation for the Fed, with potential delays to payrolls, GDP, and inflation data. The FOMC is due to meet at the end of October again, with the possibility that the committee’s data-dependent approach will be bereft of important statistics to decide on further rate cuts.

Jeanne Walters