Thu October 17, 2013
Economists Fear 'Flying Blind' Without Government Data
Originally published on Thu October 17, 2013 4:51 pm
Talk to economists about the government shutdown's impact on their forecasts and you'll hear this phrase again and again:
For economists and investors, "at this moment, we are flying blind," said Alan Greenspan, former chairman of the Federal Reserve and now president of Greenspan Associates LLC, a consulting firm.
Greenspan is not alone in feeling a little lost without the compass of government reports.
"We have not been collecting the data, so we are flying blind," said Diane Swonk, past president of the National Association for Business Economics and an economist for Mesirow Financial, a financial services firm.
Even though federal offices were reopened on Thursday morning, government economists have not yet been able to release their long-delayed reports. For example, the Labor Department's September employment report should have been released on Oct. 4. But when the government shut down on Oct. 1, it sent home the workers who should have been there releasing the statistics.
That employment report is very closely watched by investors. Its regular release — precisely at 8:30 a.m. — has the power to move markets.
But you can't see it yet. The Bureau of Labor Statistics website says the much-anticipated report will be released Tuesday.
At the Bureau of Economic Analysis, which issues reports on international trade, personal income and spending, the website read, "Please Note: BEA is currently assessing the impact of the shutdown and will post a revised release schedule as soon as possible."
The government data points — and their release times — are crucial for making decisions about investments. At BLS alone, this month's missing reports include those that measure wages, job creation, unemployment rates, import and export prices and consumer inflation.
Swonk said it's frustrating to wait for the release of data. "You feel like you're in a fog," she said. It's even more painful to think about the October data that may get skewed by delays.
She is especially worried about the monthly employment report because that one greatly influences Fed policymakers who set interest rates. If Fed officials don't have BLS data, then they have to make very consequential decisions in the dark.
And this week — just as BLS employees get back to their desks — is crunch time for October data collection.
According to the BLS, the government learns about Americans' job status when its "interviewers contact households by telephone and in person and ask questions regarding the labor market activity of household members during the previous calendar week which included the 12th day of the month—the reference week."
In other words, right now is when phone calls need to be completed about last week's jobs. "It's labor intensive to collect that information," Swonk noted.
But now BLS says the October report will be delayed by a week. Instead of being released on Nov. 1 as planned, it will be Nov. 8.
Greenspan said he was relieved that the shutdown did not go on longer. "If we went another four or five weeks without these data, it would leave a hole in our capacity to understand what's going on," he said. But the 16-day shutdown, while not trivial, probably won't distort data enough to have a major impact on the overall accuracy of 2013 economic readings, he said.
Robert Murphy, a Boston College professor and former senior economist for the Clinton Council of Economic Advisers, agreed that the shutdown ended in time to prevent long-term harm to economic forecasts.
He believes the BLS professionals will "scramble more" this month to round up the data as quickly as possible. But for now, "we'll be flying blind for a bit," he said.