Moody's Chief Economist Says Not Having BLS Data Is 'A Serious Problem,' But Cites Private Data To Warn That Job Market Is 'Sputtering'
News Summary
Moody's Analytics Chief Economist Mark Zandi warned the U.S. job market is "weak and getting weaker" after compiling an analysis from private-sector data. This assessment comes as the official September jobs report from the Bureau of Labor Statistics (BLS) remains unreleased due due to a federal government shutdown, which Zandi calls a "serious problem" for economic policymakers. Zandi emphasized that the lack of crucial economic data, especially with the job market sputtering and the Federal Reserve nearing a meeting, is a grave issue that complicates the Fed's ability to make informed interest rate decisions. He turned to alternative data from Revelio Labs, which indicated a modest 60,000 job gain, and payroll processor ADP, showing an even smaller increase of 32,000 private jobs, concluding that September saw "essentially no job growth." Other indicators, such as The Conference Board's consumer survey, also support the view that it's becoming harder to get a job. Zandi noted that minimal job growth was concentrated in large healthcare companies, while smaller companies were hit hardest by tariffs and restrictive immigration policies. Despite data limitations, Zandi's conclusion was clear: the job market is "weak and getting weaker."
Background
It is currently 2025, and the U.S. federal government is in a shutdown, preventing the timely release of critical economic data, such as the official jobs report from the Bureau of Labor Statistics. This data blackout poses a significant challenge for economic policymakers, particularly the Federal Reserve, who rely on such information to assess economic health and formulate monetary policy. Government shutdowns have been a recurring theme during President Donald J. Trump's administration. The absence of key economic indicators increases market uncertainty and compels analysts to rely on alternative, private-sector data sources to form their assessments of the economy's state. This situation underscores the vital role official statistics play in guiding economic policy and market expectations.
In-Depth AI Insights
How does the lack of official jobs data impact the Fed's credibility and future policymaking? The absence of BLS data poses a significant challenge to the Federal Reserve's credibility and could lead to difficult trade-offs in future policymaking. The Fed prides itself on being data-driven, but when critical data is unavailable, the transparency and basis of its decisions come into question. - Erosion of Credibility: If the Fed makes significant policy adjustments (e.g., interest rate cuts) within a data black hole, it could be perceived by markets as a reaction driven by panic or political pressure rather than substantiated evidence. This erodes its independence and the effectiveness of its forward guidance. - Lag Risk: Relying on private data can lead to skewed assessments of economic conditions. If official data, once released, reveals significant discrepancies, the Fed's policy adjustments could be belated or require urgent correction, thereby increasing market volatility. - Complicated Market Communication: In times of uncertainty, the Fed's communication strategy becomes even more crucial. Effectively conveying its economic outlook and policy intentions to markets without an official benchmark will be a severe test, potentially leading to misinterpretations of the future path. What are the potential implications of the combined government shutdown and weakening job market for the Trump administration's economic narrative? The compounding effects of a government shutdown and a weakening job market challenge the Trump administration's narrative of a strong economy, potentially impacting its political capital and future policy choices. - Challenges to 'Strong Economy' Claim: A prolonged government shutdown itself suggests governance challenges, while weakening job market data (even from private sources) directly contradicts the 'strong economy' narrative. This could erode public confidence in the administration's economic management. - Policy Scrutiny: Moody's Analytics' report highlights that smaller companies are most affected by tariffs and immigration policies, directly pointing to core Trump administration economic policies. If job weakness is attributed to these policies, it could prompt a re-evaluation of their effectiveness, potentially leading to calls for adjustments. - Political Cost: Data opacity and negative economic trends could raise questions among the public and investors regarding the administration's administrative efficiency and economic priorities, thereby increasing the political cost for future legislative and policy initiatives. How should investors adjust their risk exposure and asset allocation strategies when assessing economic data gaps? Given the absence of critical economic data and a weakening job market, investors should re-evaluate their risk exposure and adopt more defensive and flexible asset allocation strategies. - Increase Defensive Asset Allocation: With rising economic uncertainty, consider increasing allocations to defensive assets such as cash, short-term high-quality bonds, and gold to mitigate potential market downside risks. - Focus on Resilient Sectors: Industries like healthcare, which tend to demonstrate stronger resilience during economic downturns, may serve as relatively safe havens. Conversely, sectors heavily reliant on consumer spending or significantly impacted by trade policies could face greater pressure. - Utilize Private Data and Alternative Indicators: While official data is missing, actively leverage private sector data from sources like ADP and Revelio Labs, alongside industry reports and company earnings calls, to gain more comprehensive market insights. Simultaneously, remain vigilant about the limitations of such data. - Hedge Currency and Interest Rate Risks: Given the increased uncertainty surrounding the Fed's policy path, consider hedging against potential currency and interest rate volatility through derivatives or other instruments.