WASHINGTON – From Washington to Wall Street, policymakers and economists await the release of the monthly jobs report, published by the Bureau of Labor Statistics (BLS) on the first Friday of every month, commonly known as “jobs Friday.”
This past Friday morning, October 3, however, the anticipated economic release was replaced with something else —an announcement on the BLS website regarding the “suspension of federal government services.”
The government shutdown halted nonessential services across several agencies, including the production of economic data by the BLS. That meant a delay in September’s employment report.
The last time a government shutdown delayed the jobs report was in 2013, and the report was released a few weeks later once the government reopened.
The jobs report provides Americans a snapshot of employment trends, drawing upon two primary surveys: Current Employment Statistics (CES) and Current Population Survey (CPS). The CES program or “establishment” survey tracks metrics such as payroll, hours worked and wages earned. The CPS or “household” survey tracks labor force characteristics such as participation, unemployment rate and demographic factors.
“I think the jobs report is the most personal part of the economy,” said Tom Beers, executive director of the National Association for Business Economics (NABE). “It’s who’s working and who’s not, and it allows you to put your own life into that perspective.”
In addition to helping individuals keep track of the national employment situation, the jobs report informs critical policymaking, namely that of the Federal Reserve. The central bank relies on employment data, among other metrics, to determine the path forward for interest rates.
A cooling labor market coupled with above-target inflation has left the Board of Governors in a precarious position regarding interest rate cuts. The delayed September jobs data makes their job even harder.
“Sometimes (the jobs report) may be the only data that the Fed or business decision makers have on the previous month when they’re trying to make a call on something,” Beers said. “They’ll have to look elsewhere to piece the story together.”
Alternative sources of data include a private-sector employment report from payroll processor Automatic Data Processing (ADP) as well as proprietary data from the Carlyle Group, an alternative asset management firm.
While the Federal Open Market Committee (FOMC) announced a 25-basis-point reduction at last month’s meeting, St. Louis Federal Reserve Bank President Alberto Musalem emphasized the need to “tread cautiously.”
St. Louis Federal Reserve Bank President Alberto Musalem discusses economic and monetary policy at Brookings. (Courtesy of The Brookings Institution)
“Overemphasizing the labor market objective runs the risk of excessive policy easing,” Musalem said. “Overemphasizing the inflation objective runs the risk of not providing enough support to maintain a full employment labor market at a time when downside risks have risen.”
BLS reports may be in limbo during the government shutdown, but the Trump administration’s attacks on the data’s integrity poses a roadblock for the agency even after the government reopens.
In a statement following the BLS’s annual benchmark revisions in September, the White House argued for the need to “restore Americans’ trust in the data after years of inaccuracy that has misled policymakers and eroded confidence.”
According to Elise Gould, a senior economist at the Economic Policy Institute, the value of the Bureau’s data “cannot be overstated.”
“The politicalization of that data can be harmful to public trust and the agencies themselves,” Gould said. “Federal employees have come under attack and the loss of workers could impact the quality and timeliness of the data that’s provided.”
Nearly one week into a government shutdown and a Federal Reserve meeting on the horizon, lawmakers have reiterated the need for this data as well.
In an interview with Medill News Service, Sen. Chris Van Hollen (D-Md.) said, “Donald Trump has undermined the integrity of that report and it’s essential that it be done by nonpartisan federal employees. We hope we can resume getting it as soon as possible.”
