How the Delayed US Inflation Report May Change Fed Day

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Transcript

00:00Finally, we actually get some inflation data from the government.

00:04The Labor Department has called furloughed employees back to work to put together the September Consumer Price Index.

00:10Social Security uses a third quarter CPI average to determine next year's cost of living increase for beneficiaries,

00:17which by law must be published this month.

00:20The data had all been collected by the time the government shut down on October 1st,

00:24so it's simply a matter of collating it and making the usual seasonal adjustments.

00:30Analysts expect we'll see no appreciable slowdown from August,

00:34with headline CPI rising 0.4% during the month and core 0.3%.

00:38That would put the annual rate of inflation at 3.1% for both, another move in the wrong direction for the Fed.

00:46Unless it's much worse than that, however, the central bank is expected to cut the nation's benchmark interest rate

00:52another quarter percentage point next week.

00:54Most policymakers think tariffs are driving the increase in prices,

00:58and that impact will be relatively short-lived.

01:01They are more concerned about the labor market, which had been weakening going into September and October.

01:07Unfortunately, the government shutdown has postponed release of the jobs numbers for September,

01:12so the Fed is flying a bit blind, forced to use various alternative data

01:17to try to construct a reasonable picture of where the labor market is.

01:20Unless the shutdown ends soon, the problem will only get worse.

01:25October data is not even being collected now, let alone collated and set for release.