Economic Commentary: Evaluating the Economy in a Limited Data Environment

The ongoing government shutdown is delaying key federal data, forcing the Federal Reserve and business leaders to rely on private indicators to assess the economy. This creates significant challenges for the Fed, which must balance signs of moderating inflation against a cooling labor market without its most crucial reports. Our latest economic commentary evaluates these alternative data sources to provide a clear picture of current conditions.

Key findings from the report include:

• Softer Inflation: The September CPI came in below expectations, though tariff pressures continue to lift core goods prices.
   
• Slowing Credit Growth: Consumer credit growth has slowed, reflecting the impact of interest rates on household finances.
   
• Divergent Sector Performance: Manufacturing remains in contraction, while the services sector shows signs of stabilizing after recent weakness.
   
• Cooling Labor Demand: Private payroll data and a surge in announced job cuts point to a clear softening in the labor market.
   
• Fed Cuts Rates Again: The FOMC delivered another rate cut to mitigate downside risks but faces heightened uncertainty for future decisions.

Learn more

Download the full report below.