September Jobs Report

There was no jobs report due to the shutdown. A private estimate by ADP, puts September job growth at 166,000ish. But the private estimates are often well off from the BLS figures, which go through at least two more (sometimes substantial) revisions. The private estimates certainly aren’t the market movers the BLS figures are. But this figure, if accurate enough, provides evidence of a slowing economy. Not to mention that 800,000 people are temporarily out of paid work, and around 1 million are working with delayed pay, due to the shutdown.

This points to a reality of the shutdown: it is costly, and increasingly so the more time passes. From the 70% of federal intelligence employees furloughed, to new NIH patients turned away, to NOAA furloughing employees just to bring some back again for an approaching storm, to Maryland projected to lose $5 million of tax revenue per day. In the longer run, far more of these jobs become essential than the label suggests. 

But an overlooked effect of the shutdown is the lack of data. The Federal Reserve has pursued a policy that has a rough unemployment target (down to under 7%), and an inflation target (long term expectation no higher than 2%). Now neither statistic is being collected or reported by the BLS, the primary source for these figures. So the longer the shutdown lasts, the less reliable the data that guides monetary policy will become. 

These data co-occur with significant daily market movements. So The Economist suggests a bright side: there are multiple data reports that will now stop, and by withdrawing them, economists can learn if those reports contribute to the volatility of stock prices, which could be a proxy of their importance, or if they are just background noise. An important and economically damaging experiment is under way.