With official labor data frozen by the ongoing government shutdown, economists are turning to private sources, and the results are grim. Moody’s Analytics chief economist Mark Zandi warns that the U.S. job market is “weak and getting weaker,” with little to no job growth in September. Without the Bureau of Labor Statistics’ (BLS) data, policymakers and the Federal Reserve are left flying blind as inflation ticks upward and recession fears mount.
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Private Data Replaces Official Reports
As the government shutdown halts the release of official figures, analysts have shifted to private-sector reports from ADP and Revelio Labs for clues on employment trends. According to Moody’s, when averaged together, these reports indicate “essentially no job growth” last month. Zandi’s warning underscores how fragile the labor market has become without official oversight from the BLS, the nation’s most trusted data source.
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ADP Data Shows Job Losses
The payroll-processing firm ADP reported that the U.S. shed 32,000 private-sector jobs in September. However, Zandi believes this figure “understates the decline,” citing additional government employment cuts linked to ongoing DOGE-related reductions. ADP’s findings reveal a troubling pattern: job gains are largely limited to the health care sector, while smaller companies are struggling the most. “Smaller companies are getting hit hardest by the tariffs and restrictive immigration policies,” Zandi wrote.
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Revelio Labs Offers Slight Relief
In contrast, workforce analytics firm Revelio Labs estimated that the U.S. added roughly 60,000 jobs in September, but Zandi cautioned that the details tell a less optimistic story. “The paltry gain” was almost entirely driven by education and health care jobs concentrated in California, New York, and Massachusetts. Economists say that such narrow regional and sectoral growth highlights the uneven nature of the recovery.
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Economists Flying Blind Without BLS Data
The Bureau of Labor Statistics’ jobs report, normally a cornerstone of economic policymaking, was not released due to the shutdown. That absence has left both economists and the Federal Reserve operating with incomplete information at a pivotal time. “There is no more important economic data, particularly now, when the job market is sputtering,” Zandi emphasized, warning that the delay could distort upcoming policy decisions.
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Wall Street Remains Unfazed
Despite the grim signals from private reports, major U.S. stock indexes continue to hover near all-time highs. Investors appear to be betting that the Federal Reserve will continue to cut interest rates to cushion the economy. The CME FedWatch tool currently shows a 95% probability of another quarter-point rate cut later this month.
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Federal Reserve Faces Dilemma
The Fed last cut interest rates in September, citing a weakening labor market despite inflation staying above the 2% target. Now, policymakers are caught between two conflicting priorities: stimulating job growth or curbing inflation. “We’ve been 4 1/2 years above 2% and now inflation is rising,” said Austan Goolsbee, president of the Chicago Federal Reserve. “And that makes me nervous about front-loading too many of the rate cuts.”
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Shutdown Risks Delaying More Data
If the shutdown drags on, the release of mid-October inflation data could also be delayed. Economists warn that this would not only complicate monetary policy but also push back the Social Security cost-of-living adjustment (COLA) announcement, which depends on September’s inflation numbers. “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.”