The Federal Reserve faces an unprecedented challenge as it prepares to set interest rates next week—making its decision with almost no economic data available.
The government shutdown has halted the release of most U.S. economic statistics, including the monthly jobs report. However, the Fed also recently lost access to one of its main private sources of backup data.
Payroll-processing giant ADP quietly stopped sharing its internal data with the central bank in late August, leaving Fed economists without a real-time measure that had covered about one-fifth of the nation’s private workforce. For years, the feed had served as a real-time check on job-market conditions between the Bureau of Labor Statistics’ monthly reports. Its sudden disappearance, first reported by the Wall Street Journal, could leave the Fed “flying blind,” former Bureau of Labor Statistics commissioner Erica Groshen said.
Groshen told Fortune that, in her decades working at the BLS and inside the Fed, the loss of ADP data is “very concerning for monetary policy.”The economist warned that at a moment when policymakers are already navigating a fragile economy—Fed Chair Jerome Powell has said multiple times that there is no current “risk-free path” to avoid recession or stagflation—the data blackout raises the risk of serious missteps.
