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Powell: 'We would just have to deal’ with less data if government shuts down

Federal Reserve Chair Jerome Powell says the central bank is "awaiting further data" as it mulls whether to raise rates during two more meetings scheduled this year. The possible coming government shutdown could make that more difficult.

If the government does indeed stop much of its operations in about 10 days, as appears increasingly likely, economic tracking from agencies like the Bureau of Labor Statistics would cease as the federal employees who gather and prepare that information are furloughed.

"We would just have to deal with that," Powell said at a press conference Wednesday, responding to a question from Yahoo Finance's Jennifer Schonberger about the possibility of a data shortage.

The Fed decided Wednesday to hold rates steady, at a 22-year high, while leaving open the potential for one more hike this year.

Powell on Wednesday also noted the possibility that a shutdown could stretch all the way to the next Fed gathering — scheduled for Oct. 31 — saying "it's hard for me to say in advance how that would affect that meeting ... but it's certainly a reality that that's a possibility."

A shutdown would likely largely shutter agencies like the Bureau of Labor Statistics, which compiles key economic indicators such as the monthly jobs report.

The BLS also publishes the Consumer Price Index, one of the most closely watched measures of inflation, the Job Openings and Labor Turnover (JOLTS) survey, and other economic measures.

WASHINGTON, DC - SEPTEMBER 20: Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on September 20, 2023 at the Federal Reserve in Washington, DC. In the face of slowing inflation and strong consumer spending, the Federal Reserve announced that it will keep the interest rate steady, holding the benchmark borrowing rate to a range of 5.25% to 5.5%. (Photo by Chip Somodevilla/Getty Images)
Federal Reserve Board Chairman Jerome Powell speaks during a news conference Wednesday in Washington. (Chip Somodevilla/Getty Images) (Chip Somodevilla via Getty Images)

"In the event of a federal government shutdown, the Bureau of Labor Statistics will suspend data collection, processing, and dissemination," a BLS spokesperson recently told CNN in a statement, adding that normal operations would resume once funding is restored.

Powell also took note Wednesday that non-governmental groups would continue to track and release information so the Fed would be far from flying totally blind. Nevertheless, “we wouldn't be getting some of the data that we would ordinarily get.”

Elsewhere during Wednesday’s press conference, Powell weighed in to downplay the possible economic effects of a shutdown itself. He noted that shutdowns have historically not had large macroeconomic effects.

But experts note that the effects could begin to mount if the shutdown becomes an extended one. Some have even floated the outside possibility of a government shuttering that lasts for the entire fourth quarter of 2023.

Ben Werschkul is Washington correspondent for Yahoo Finance.

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