Government shutdown may loosen grasp on vital economic stats

Government Shutdown Looming

A looming federal government shutdown caused by the deadlock on the budget may affect the release of the latest economic statistics, which in turn can hamper analysis of the impact of surging commodity prices.

An estimated 800,000 government workers, including employees of the Commerce and Labor Departments, will be affected by a potential government shutdown.

The two departments collect and release a wide spectrum of economic data from unemployment rate to inflation figures.

Economists and investors will be temporarily blind to what is happening with the economy during a shutdown. Updated reports will not be available to guide business decisions and short-term economic policy.

At least three government reports will be delayed. These are import price data for the month of March, trade deficit figures and the March budget of the Treasury Department.

If the government shutdown is prolonged, reports about retail sales and consumer prices for March will also be delayed. Jobless claims for the past week will also be unavailable.

The last time a government shutdown happened was on December 1995 until January 1996. A total of 26 days were lost due to the closure of federal offices then. After employees came back, they had to grapple with a backlog of reports.

While a shutdown is a real possibility, March reports showed bright prospects as the U.S. economy added 216,000 jobs for the month and the unemployment rate dropped to 8.8 percent, the lowest mark in two years.

Economists hope that the impending government shutdown will not take away any momentum from the economic recovery.

Posted by James Fried on Thursday April 07 2011, 12:10 AM EST. Ref: Bloomberg. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0