In a recent appearance on ‘Mornings with Maria,’ Larry McDonald, founder of Bear Traps Report and bestselling author, issued a stark warning about the precarious state of Wall Street. He claimed that the financial market is experiencing its most significant risks since the 2008 financial crisis, highlighting escalating defaults, unstable banks, and impending economic turbulence. This cautionary outlook comes amid a deepening partisan standoff in Washington, which raises concerns about a potential government shutdown that could disrupt economic data releases crucial for gauging the health of the economy.
The Labor Department is bracing for the impact of a potential shutdown, outlining a 73-page contingency plan that anticipates the suspension of operations by the Bureau of Labor Statistics (BLS). The plan states unequivocally, “Economic data that are scheduled to be released during the lapse will not be released,” a move that could have serious repercussions for economic forecasting and policy decisions. Notably, the agency typically publishes around a dozen critical reports each month, covering various aspects of the economy, including import and export prices, wages, and more.
If Congress does not approve a funding extension, the government is set to shut down at 12:01 a.m. ET on Wednesday. This timing aligns with the planned release of the monthly nonfarm payrolls report from the BLS, which comes amid a marked slowdown in job growth. Additionally, the BLS presents a weekly update on initial jobless claims every Thursday, a vital indicator of employment trends.
Looking further ahead, the upcoming Consumer Price Index (CPI)—a key measure of inflation—is scheduled for release on October 15. This data will serve as the final inflation snapshot for Federal Reserve policymakers ahead of their next policy meeting on October 28-29.
However, the Labor Department cautioned that a shutdown would affect more than just scheduled reports, indicating that all active data collection activities for BLS surveys would halt. This could lead to delays in other data releases, compounding the economic uncertainty.
Moreover, the Labor Department warned that its website would be rendered inactive during a shutdown, meaning no updates or corrections could be made in the event of technical issues. The potential combination of disrupted data and the ongoing turmoil in the financial markets creates a challenging environment for economic stability as stakeholders await further developments.
