According to New York Times, the government shutdown is officially over. Unfortunately, a lot of the economic data will have to wait. This comes at a very poor time as many analysts and policy makers were just starting to grow concerned about the economic expansion finally ending after a decade. With so much uncertainty surrounding the economy, the Fed are going to be paying very close attention these next couple weeks to the data that is coming out in order to make the best decisions regarding the interest rates and other related matters.
As a result of the government shutdown, the economy lost close to $11 billion, most of which should be should be recovered as more federal workers return to their jobs. Although some data still has yet to be released following the shutdown, the Bureau of Labor Statistics were still able to collect and release inflation rates, unemployment and hiring estimates like usual. Other pieces of data that require a number of different indicators, such as GDP, cannot be released until the rest of the data has been found. Analysts still do not know how the government plans to get back on schedule regarding the releasing of quarterly data, but the answer will probably vary. Luckily, many economists have stated that the government shutdown was lifted before more serious damage could have been done.
Overall, this seems to be a very uneasy time for the Fed and the government. With the economy seeming to be on its way to a downturn, this data is very important to figure out how to deal with the interest rates, and other ways the Fed could help prevent the upcoming recession, which is looking to be inevitable. It will be interesting to see what happens within the economy the next few weeks to see if more data is released regarding both the economy and the Fed.
Source: https://www.nytimes.com/2019/01/28/business/economy/economy-government-shutdown.html
5 comments:
Jack - its actually ironic how the Fed is waiting to analyze data, but the markets are staring at the Fed waiting to see their move. It sounds like a soccer game with a lot of good defense. I agree with the statement in the article about how economists think that the shutdown was lifted before more serious damage was done. Hopefully, analysts can find a way to publish data and those numbers will be able to answer many questions. In a perfect world, the numbers come out positive and allow markets to be at ease. But I doubt we'll see that.
I agree, it seems very unlikely that the numbers will be promising moving forward. Hopefully the government shutdown was lifted just in time to prevent a lot of economic damage moving forward. It will be interesting to see how these numbers end up looking when the Fed finally analyzes the data a releases it to the public.
Jack,
Although the government shutdown is in no way a beneficial thing, I too believe serious damage has not been done to the overall economy. However, it is quite disappointing as to the reason why the government shut down to begin with. As most people know, our current president and Congress could not decide on a budget (specifically funds for the wall). People like to hop on the bandwagon and criticize Trump, placing all the blame on him. However, this is a two way street. Regardless of political differences, both sides of the aisle acted childish and hurt the American people.
Jack,
It is clear that the shutdown had profound short term impacts on the economy. However, it is unclear on what longer term effects this will have on the US economy. Many believe that the lost GDP will be made up throughout the year, which is the boat I'm in. I also hope that the government will come up with a more permanent solution to end the shutdown.
Jack, I completely agree that this lack of information and useful data could be detrimental to the economy. Luckily, as the shutdown has ended, we can hope that things will return to the free flow of information that was available prior, yet the delay could impact the models and variables that economists use to construct theories and make claims about the health of the economy. According to Bloomberg, the commerce department and census bureau were key institutions that put their data on hold during the shutdown. Some examples are new home sales, construction spending, international trade volumes, business inventories, and retail sales stand out to me as important indicators that we are lacking. As Jack M. noted, I also hope the end to the shutdown isn't temporary and we find a more stable solution.
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