Impact of Government Shutdown on U.S. Employment Data
During a morning interview, U.S. Labor Secretary Lori Chavez Deremer addressed the effects of the government shutdown on employment statistics, layoffs, and related issues. Major economists are expressing concerns that job growth in the U.S. is diminishing significantly as the government closure disrupts the release of important employment data.
Mark Zandy, chief economist at Moody’s Analytics, shared his insights in a recent post, emphasizing that these shutdowns hinder the release of the Bureau of Labor Statistics (BLS) Jobs Report for September, which was due out on Friday. In light of this, analysts are now turning their attention to other sources of employment data, although these aren’t perfect substitutes.
“While it’s not an exact replacement, there’s a useful private source for job data,” Zandy wrote, referring to Revelio Labs. He noted that they are devising reports that estimate job growth by utilizing professional networking platforms like LinkedIn. According to their data, employment rose by about 60,000 in September, mostly in education and healthcare sectors.
However, Zandy pointed out that even this slight increase was subject to considerable revisions. It seems that nearly all growth is concentrated in California, New York, and Massachusetts, indicating a regional disparity.
What Was Expected from the September Employment Report?
Due to the government shutdown, the September employment report is now delayed, and there were expectations for it to illustrate a rather stagnant job market. For instance, a recent ADP report indicated a loss of 32,000 jobs in September, heightening concerns about employment trends, particularly within the large healthcare sector.
Small businesses, Zandy mentioned, face the greatest challenges from tariffs and restrictive immigration policies. This makes it likely that the reported job losses for these businesses may be worse than stated, especially since government employment has also dipped amid ongoing budget cuts.
The average employment estimates from both Revelio and ADP for September suggested minimal to no job growth for the month.
Context of Job Market Data
Zandy further noted that various job market metrics support the ADP findings. Meeting employment goals remains complex, particularly as consumer confidence has dropped since the pandemic’s initial easing in 2021. In fact, predictors for changes in unemployment rates aren’t showing promising signals, possibly indicating a rise again in September.
“Without the BLS job data, assessing the overall economic health becomes challenging. But at least for now, private data sources are adeptly filling that information void, showing a continued weakening in the job market,” Zandy elaborated.
Alternative Data Sources Amid the Shutdown
Federal Reserve Chair Goolsbee indicated that central banks have alternative data options if government shutdowns impede economic reports. Economists had initially anticipated that the BLS’s September employment report would reveal 50,000 new jobs, with the unemployment rate remaining steady at 4.3%.
Once the government reopens, the BLS will publish the employment report for September, though it may not coincide directly with the lifting of the shutdown.
