The Fed is turning to these data sets during the shutdown. Here’s what they reveal about the economy

While government statistical agencies are not publishing critical data during the ongoing shutdown, Federal Reserve officials are closely monitoring private sector data to highlight economic trends.

Data from the Bureau of Labor Statistics and other agencies are considered the “gold standard” by economists and provide the most comprehensive view of the economy. However, alternative indicators provide the Fed with some ideas about what is happening with inflation and the labor market during the shutdown. The data is crucial to helping the Fed achieve its dual mission of keeping price increases stable at 2% annually and maintaining high employment rates.

“It doesn’t replace government data, but it gives us a picture,” Fed Chairman Jerome Powell said last week in a news conference after the Fed’s decision to cut interest rates by a quarter point. “If there are substantive developments, I think we will pick them up.”

The private data is particularly important because the latest official reports showed high inflation and a weak labor market. This increases the risk that the United States will slide into “stagflation” as trade wars and ongoing government shutdowns send shockwaves through the economy.

In the same press conference, Powell mentioned several indicators that Fed officials are closely monitoring during the Fed’s data blackout.

Here’s what these specific indicators say about the economy:

Statewide Initial Unemployment Claims

Although the Labor Department does not publish its usual weekly report on unemployment claims, analysts at Goldman Sachs and JPMorgan were able to compile an estimate based on reports from states. According to that estimate, 219,000 people filed for unemployment benefits last week, down from 232,000 the week before. Reuters I mentioned.

Earlier this week, Fed Governor Lisa Cook noted that while recent data points to strength in the labor market, it has continued to weaken since the last official report in August, and that the unemployment rate rose to 4.3% in August from 4% in January.

“Taken together, the slightly higher unemployment rate suggests the labor market is declining, but only modestly,” she said.

Real job opportunities

Powell said he was looking at private data on job openings on sites including Indeed, which similarly points to a slowdown in the job market.

Last week, its job vacancy index fell to its lowest level since February 2021, continuing a downward trend that began in mid-2022.

ADP payment data

Payroll provider ADP publishes reports on job gains and losses in the private sector, as well as workers’ wages.

The latest ADP reports showed a slowing labor market. Private sector employers added 42,000 jobs in October, slightly more than the 35,000 jobs lost over the previous two months, and well below the typical six-figure monthly pace.

The Fed will see another ADP report before its next policy meeting in December.

Price statistics

Powell said private data provider PriceStats provides a look at inflation in the absence of official data such as the personal consumption expenditures report from the Bureau of Economic Analysis.

PriceStats creates a daily price index by scraping online prices on the web. The data is not publicly available, and the company did not immediately respond to the data request.

The PriceStats index rose 2.66% on the year in September, the highest annual inflation rate since 2023, financial firm State Street reported. By comparison, the Consumer Price Index rose 3% in September, its highest level since January.

Adobe

Software company Adobe also publishes a price index based on data from online retailers.

Online prices fell 2.9% on the year in October, according to Adobe, marking the 26th straight month of sustained contraction.

Beige book

Powell has praised the Fed’s Beige Book as an important, if unofficial, source of economic data.

The Beige Book compiles reports from Federal Reserve branches across the country. In October, the report showed that the labor market was losing steam due to falling employment rates and falling hiring rates.

The next beige book is scheduled to be released on November 26.