(NewsNation) — With official data on hold due to the government shutdown, economists are turning to private reports, and the early signs, according to Moody’s, aren’t good.
“This data shows that the job market is weak and getting weaker,” Moody’s Analytics chief economist Mark Zandi wrote Sunday.
Zandi pointed to two separate private reports — from ADP and Revelio Labs — which, when averaged together, suggest there was “essentially no job growth” last month.
The monthly jobs report from payroll-processing firm ADP showed the U.S. shed 32,000 private-sector jobs in September.
However, that likely “understates the decline,” Zandi noted, since “government employment surely also fell in the month given the ongoing DOGE-related cuts.”
ADP’s report highlighted a familiar story: The few jobs being added are almost all in health care, and it’s mostly big employers, with 500 or more workers, doing the hiring.
“Smaller companies are getting hit hardest by the tariffs and restrictive immigration policies,” Zandi wrote.
A separate report from workforce-analytics firm Revelio Labs offered slightly better news, estimating the U.S. added roughly 60,000 jobs in September. But the details paint a less rosy picture. The “paltry gain” was driven largely by education and health care — and “almost exclusively” by California, New York and Massachusetts, Zandi said.
While private data helps fill the void, no alternative carries the weight of the official numbers from the Bureau of Labor Statistics, which weren’t released last week due to the ongoing shutdown.
That’s left economists and policymakers flying blind at a crucial moment for the U.S. economy, with the labor market weakening and inflation ticking up.
“There is no more important economic data, particularly now, when the job market is sputtering and the Federal Reserve is a few weeks from another meeting when it must decide whether to continue cutting interest rates,” Zandi said.
So far, the lack of data hasn’t deterred Wall Street, with major indexes still hovering near all-time highs.
Will the Fed continue to cut interest rates?
The Federal Reserve cut interest rates for the first time this year in September, citing a weakening labor market even as inflation remains above its 2% target.
Policymakers are widely expected to cut rates again later this month, with traders pricing in a 95% chance of a quarter-point reduction, according to the CME FedWatch tool.
Still, the data blackout is a wild card, and if it persists, officials may be more reluctant to cut.
“I consider the Bureau of Labor Statistics job data to be the absolutely best data source on jobs and statistics in the entire world,” Austan Goolsbee, president and CEO of the Federal Reserve Bank of Chicago, told Marketplace in a recent interview. “If we aren’t going to have those, it’s problematic.”
Right now, the Fed is facing pressure on both sides of its dual mandate — inflation is rising while the job market is weakening. That’s left policymakers with no obvious path forward, forced to choose between cutting rates to support the labor market or holding them steady to rein in inflation.
“We’ve been 4 1/2 years above 2% and now inflation is rising,” Goolsbee said. “And that makes me nervous about front-loading too many of the rate cuts.”
If the shutdown drags on, inflation data due in mid-October could also be delayed, and unlike employment, there are few reliable private indicators.
“I still think the underlying economy is a pretty strong economy and that we can get rates down a fair amount,” Goolsbee said. “I just want us to be careful [of] overly front-loading before we have the evidence.”
September’s inflation numbers also determine next year’s Social Security cost-of-living-adjustment, meaning the announcement could be delayed if the data doesn’t arrive on time.
