The shutdown of the federal government means all non-essential employees are prohibited, by law, from coming to work. Among those jobs considered ‘non-essential’ are the departments and agencies which collect and process the government’s official economic data.
Why is this important? Government does not just collect data on our economic health for its own sake. Government collects it so that businesses, investors, entrepreneurs, and consumers can make informed decisions. Information is the life-blood of our economy, particularly in those industries likely to see the most opportunities for growth. Without this information, it will be more difficult for businesses to gauge future demand, investors to decide where to send capital, and entrepreneurs to raise capital to fund new ventures.
For example, the Bureau of Labor Statistics, which publishes the official unemployment rate along with the number of jobs created each month, will be closed. This means that come this Friday, we may not know what our nation’s unemployment rate or job creation was in September. The data have already been collected for the month of September. They probably have already been counted and sorted. But they may not be released if the government is not funded. The question the government has to answer is whether having this data sitting there is too problematic and whether they can or should release the unemployment numbers for September to avoid an accidental leak.
If the government shutdown continued, we would not receive the first estimate of our nation’s third quarter economic performance (GDP), which is due to be released on October 30. Even if the shutdown is over by then, the data may be late, as all of the staff and time that it takes to compile this data will be lost. In between now and then, figures on our international trade data, data on prices and inflation, housing starts, and many other pieces of critically important economic data will cease to exist.
It is impossible to measure what is not counted. If the government is not measuring our nation’s economy then it is failing one of its most basic responsibilities. This failure may be a small component of the consequences of a government shutdown. But, unlike many cases in economics, the directional effects are clearly known and non-debatable: it will be bad for economic growth and productivity. How bad? That depends on how long the shutdown lasts.