Official U.S. economic data is expected to return next week after the government shutdown ends, but BofA Securities analysts have warned that some key data may not be available before the Fed’s policy meeting on Dec. 10. The lack of data for more than 40 days has made it difficult for investors and policymakers to assess the current state of the economy.
The situation poses a major challenge for the Fed, which relies heavily on recent indicators such as employment and inflation. The central bank cut interest rates twice in September and October to support a sluggish labor market, but now Fed officials appear divided on whether to continue with a rate cut at the final meeting of the year.
According to CME FedWatch, the chances of a December rate cut are around 50-50. The market is now awaiting the release of “data” next week, including the September jobs report, but October data is expected to be incomplete, and November figures may be delayed.
BofA analysts expect the BLS to likely skip the October CPI, while the November CPI is at risk of being affected by Black Friday sales. This uncertainty could affect the Fed's ability to make policy decisions based on the true economic picture.
With October and November data likely not released before the December meeting, Chairman Jerome Powell has indicated that the Fed may choose to keep rates unchanged until the economic picture becomes clearer.
