Shutdown-Related Data Shortfalls Lead Fed to Delay Reducing Rates

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Shutdown-Related Data Shortfalls Lead Fed to Delay Reducing Rates

Bitget-RWA2025/11/16 12:44

By:Bitget-RWA

- U.S. government shutdown ended Nov 12, 2025, but left critical economic data gaps for Fed's December rate decision. - 1.4 million furloughed workers and $11B lost output highlight shutdown's severe economic impact despite mixed private-sector data. - Fed faces delayed/missing jobs reports and CPI data, increasing likelihood of rate cut pause as policymakers emphasize data caution. - Market expectations shifted from 95.5% to 53.6% chance of December cut, reflecting demand for evidence-based monetary polic

After 43 days, the United States ended its longest-ever government shutdown on November 12, 2025, when Congress approved a bipartisan spending package to restore federal operations. Although this broke the political deadlock and eased immediate economic worries, it created a new challenge: a significant lack of essential economic data for Federal Reserve officials as they approach their December meeting. With key reports on jobs and inflation either postponed or possibly lost, the Fed must now navigate with limited visibility,

making it more likely that interest rate reductions will be put on hold

The shutdown had a major economic impact. Roughly 1.4 million federal employees were either furloughed or went without pay for a month and a half,

resulting in a projected $11 billion decrease in economic output

over the coming year, according to estimates from the Congressional Budget Office. Still, private-sector figures paint a somewhat less negative picture. The ADP report indicated private payrolls grew by 42,000 in October, surpassing forecasts, and

the Chicago Fed’s nowcast estimated unemployment

at 4.36% for both September and October.

Shutdown-Related Data Shortfalls Lead Fed to Delay Reducing Rates image 0

Despite these signals, the lack of official government statistics has left decision-makers with only a partial understanding of labor market conditions.

The Fed’s December gathering will proceed without access to the September and October employment numbers, the October inflation data, and other vital statistics.

Representatives from the Bureau of Labor Statistics have admitted

that the October CPI and jobs data may never be fully recovered, as data collection was either stopped or drastically reduced during the shutdown. This information gap has increased uncertainty among Fed policymakers, with several stressing the importance of patience. “It’s crucial to wait for as much data as possible before making decisions on rates,”

said San Francisco Fed President Mary Daly

, while

New York Fed President Michelle Witzman Collins remarked

she would be reluctant to loosen policy further without unmistakable evidence of a weakening labor market.

Financial markets have already adjusted their outlook. By November 13,

the odds of a rate cut in December had dropped

to 53.6%, down from 95.5% in early October, showing that traders expect the Fed to base its actions on available data rather than act preemptively. Fed Chair Jerome Powell’s previous comments—highlighting the need for caution amid ongoing uncertainty—have further fueled this cautious approach. With the December meeting approaching,

more analysts are predicting a pause in rate reductions

, giving policymakers time to evaluate the economy with the limited information at hand.

The repercussions of the shutdown go beyond monetary policy.

Court-appointed defense lawyers who went unpaid

, and who represent 40% of low-income criminal defendants, experienced major disruptions, with many forced to borrow money or take extra jobs to get by. Although payments are set to resume, the backlog of pending cases highlights the wider strain on federal services.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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