Derek L. from Denver, CO asks: Hi Mitch, my question is about the absent jobs report given the government shutdown. Since rate cuts seem to be closely tied to the employment situation, won’t this make it harder for them to decide what to do with rates? And if that’s the case, would the lack of data cause more volatility since no one knows what to expect?
Mitch’s Response:
As you point out, we’ve entered October with no jobs data for September. Typically, the first Friday of the month is when we get the Bureau of Labor Statistics (BLS) Employment Situation Report. With the ongoing government shutdown, that didn’t happen. Economists, investors like yourself, and the Federal Reserve are left without a key instrument for assessing the state of the economy.1
But this doesn’t mean there are no jobs data anywhere.
In fact, there’s actually quite a bit of data out there, which comes from the private sector. For instance, ADP’s payroll data, drawn from more than 26 million workers, showed private-sector employment fell by about 32,000 in September. Challenger, Gray & Christmas found hiring plans have dropped to their lowest level since 2009, with job cuts so far this year near their highest since 2020. Small-business data from Intuit’s QuickBooks platform showed firms with fewer than 10 employees cut nearly 50,000 jobs last month.
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These data paint a fairly weak picture. But on the other hand, the Chicago Fed’s new real-time unemployment estimate held steady at 4.3%, suggesting the labor market isn’t collapsing. It just isn’t adding much new hiring momentum.
What we’re essentially left with is a mosaic of data to parse from. The indicators we’re watching paint a picture of a labor market that’s stagnating. Job creation has slowed sharply since spring, layoffs have picked up in some areas, and both manufacturing and services purchasing managers’ indexes show employment contracting modestly. We think this weak overall tone, across multiple measures, is likely enough to keep the Fed on track for additional rate cuts this fall.
But here’s the important point: while missing the BLS report is inconvenient, it probably doesn’t change much for investors. The Fed will still make decisions based on the best available evidence, and markets have already had months to digest signs of cooling. Stocks are forward-looking, they don’t wait for backward-looking government data to confirm what private data and market prices already suggest.
There’s also a bit of irony in all the angst about flying blind. Even when the BLS is open, its jobs reports are far from perfect. They’re based on surveys with declining response rates, subject to revisions, and often tell a different story months later than they do on release day. In some ways, drawing on multiple data sources—ADP, Challenger, the PMIs, and others—can actually provide a more rounded real-time view.
So, while the shutdown is frustrating and the data blackout adds uncertainty for policymakers, investors shouldn’t overreact. The broader picture shows a slowing but still expanding economy, with inflation gradually easing and with a Fed inclined to keep trimming rates. If anything, the private reports hint that the labor market is soft enough to keep that easing path in motion.
Investors don’t need perfect jobs data to make smart decisions. Even with the current data gaps and an uncertain rate path, you can still build a fixed-income plan that balances income with flexibility.
One practical tool is the bond ladder, a way to lock in income now while keeping options open if the Fed continues to adjust rates.
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Disclosure