‘Flying blind’: Americans are left in the dark on state of the economy during a government shutdown

us capitol government shutdown 2018Associated Press/Carolyn Kaster

  • A partial government shutdown entered its seventh day on Friday.
  • The Department of Commerce won’t report economic figures until Congress reaches a funding compromise.
  • Economists and political scientists say the lapse in data releases poses risks to the economy and to government institutions.

Wall Street is having its worst December since the Great Depression. The largest economies in the world are preparing to negotiate a trade war. And legal experts are examining whether the chairman of the Federal Reserve can be fired by the president.

But key economic data won’t be released to Americans until a new spending bill is passed.

Parts of the federal government were shut down last weekend after lawmakers failed to reach a funding compromise with President Donald Trump, who has demanded $5 billion for his long-promised wall along the US’s southern border.

Because of a lack of appropriations, the Department of Commerce said it would not publish the closely watched economic figures it usually does, including home sales, gross domestic product, inflation, personal income, and the trade balance.

“Without that data, US businesses are flying blind,” said Donald Moynihan, chair of the McCourt School of Public Policy at Georgetown University.

“One of the historical strengths of the US economy is the ability to rely on high-quality data produced by the government. But right now US businesses are facing into a new year without data that their peers in other developed economies will have.”

The shutdown comes at an already uncertain time in the US, where fading stimulus, trade tensions, and interest rates have raised expectations for slowing growth. With historic recession signals emerging, a lack of data could fan fears about a crisis.

More than half of economists surveyed by the Wall Street Journal forecast that a downturn could begin in 2020.

“Not getting the official economic data is likely to add even more fear to markets and consumers that are anxious about the possibility of recession in 2019,” said Austan Goolsbee, a former economic advisor to President Barack Obama.

Offering some relief to policymakers and businesses, the Department of Labor is still set to release the jobs report.

Moody’s economist Adam Ozimek said while missing out on other data would add to uncertainty, employment numbers are the most crucial for understanding where the economy is in the business cycle.

“So long as we can keep our eyes on inflation and the job market in the near term, the lack of information is unfortunate but not devastating,” he said.

Still, less obvious consequences for American businesses could outlast the shutdown, especially in the case of a prolonged impasse. The turmoil could make it more difficult for the government to maintain top staff at the Commerce Department, for instance.

“US businesses benefit from our government being able to recruit outstanding scientists because of the opportunities to work with great data,” Moynihan said. “But every shutdown creates enormous disruptions. I worry that the Trump era will make it harder to recruit and retain these scientists in the future.”

Lawmakers this week appeared to give up on a spending bill, handing the crisis off to the 116th Congress convening in the new year. With Democrats taking control of the House of Representatives, a newly divided government will change the calculus of a spending bill.

In the meantime, the new Congress will likely face pressure to at least negotiate a stopgap funding measure.

A Reuters/Ipsos poll conducted last week found 47% of American adults blamed the president, who earlier this month said he was “proud” to shut down the government over border security. Meanwhile, 33% of Americans held congressional Democrats responsible, according to the December 21-25 poll, and 7% faulted Republican lawmakers.

But Jonathan Weiler, a political scientist at the University of North Carolina at Chapel Hill, said political ramifications would become less certain the longer a shutdown goes on.

“Substantively, the lack of available economic data, while likely not a serious problem in the short run, would certainly become more serious as the days and weeks pass,” Weiler said. “And I should add that if I don’t think this will last long, it almost surely will.”

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