Risk of a Government Shutdown in the US is Growing: If It Happens, Will the Fed’s Interest Rate Decision Be Affected?

The potential for a government shutdown in the US puts critical economic data at risk. According to the US Department of Labor's previously released operational contingency plan, the September jobs report, scheduled for release next week, would be postponed if the federal government shuts down.

The extent of the government shutdown remains unclear. Many agencies, including the Bureau of Labor Statistics (BLS), which prepares the employment report, have not yet released their updated emergency plans. If Congress fails to approve the budget by next Tuesday, these agencies will be forced to cease operations under their previous plans.

According to the Department of Labor's updated plan in March of last year, all data collection and release processes would be suspended during a government shutdown. This could delay the release of BLS data.

In such a scenario, the US Federal Reserve (Fed) would be deprived of critical employment and inflation data ahead of its interest rate meeting on October 28-29. Experts believe this could exacerbate risks by increasing uncertainty surrounding the Fed's monetary policy decisions.

*This is not investment advice.