Thanks to the U.S. government shutdown, most of the high frequency economic data published by the government has been delayed.
Last week, we didn’t get scheduled releases on construction spending, factory orders, or employment. Next week, we may not get releases on trade, job openings, wholesale inventories, import prices, inflation (PPI), retail sales, and business inventories.
The data produced by the private sector offers decent proxies for the government’s data. But it’s not perfect.
“[A]s the month progresses, secondary data that is key to calculating GDP (trade and inventories) will be sorely missed by economists attempting to track growth,” wrote UBS’ economics team led by Maury Harris and Drew Matus.
Eventually (we think), the government will reopen.
“When an agreement is ultimately reached, market participants could get an avalanche of data releases — including those that were delayed last week,” said Deutsche Bank’s Brett Ryan.
“We may have the mother of all data release days once this shutdown ends if it continues for long,” tweeted Bloomberg Chief Economist Michael McDonough.
And the market participants will be in a mad scramble to price it all in. Fortunately, all of that data is unlikely to come in one fell swoop.
“The timing of the releases will depend on when the government reopens,” added Ryan. “In January 1996, payrolls were delayed two weeks. However, the 1995/1996 shutdown encompassed the survey period. The current government shutdown began well beyond the survey period, so the BLS just needs to finish compiling the data, which should take only a few days.”
If the shutdown, however, overlaps with a particular report’s survey period, then we could have a bigger short-term inconvenience.
“[B]oth the compilers at the head office and the workers in the field are classified as non-essential,” said Morgan Stanley’s Vincent Reinhart. “This means that data already collected will be released late and data that was scheduled to be collected now is corrupted.”
The shutdown also risks having significant monetary-policy implications.
“Should the shutdown continue for too much longer it will jeopardize data collection for next month’s payroll report and possibly create data quality issues across the spectrum of government releases,” said UBS. “As a consequence, all government data is likely to be suspect for at least the month following the end of the shutdown, complicating the FOMC’s tapering decision (which we still expect to be announced at the January of 2014).”
Ultimately, it would be nicer for everyone if the government would reopen sooner than later.
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