U.S. Government Shutdown Would Delay Data on Overseas Trade, Import Prices

A partial shutdown of the federal government forced by the budget impasse in Congress would delay release of U.S. economic data, making it more difficult to determine the influence on growth of the recent jump in commodity prices.

About 800,000 government workers would be affected by a shutdown, an administration official said today. That would include staff at the Labor and Commerce Departments who compile information on everything from consumer prices and the unemployment rate to retail sales and trade.

“They won’t be working,” said David Resler, chief economist at Nomura Securities International Inc. in New York, recalling what happened in 1995-1996, the last time federal agencies closed due to a budget dispute. “It really mucked up our ability to understand what was going on in the rest of the economy because we had no data.”

Federal government offices closed for six days in November 1995 and for another 21 days from December until a funding agreement was passed on Jan. 5, 1996, sending employees back to work the following Monday, Jan. 8. After the second shutdown, the federal agencies struggled to put out a backlog of reports.

Now, a partial shutdown of the government would delay three reports scheduled for April 12. These include Labor Department data on import prices for March, Commerce Department figures on the trade balance for February and the Treasury’s budget for last month. Depending on the length of a shutdown, other reports next week could also be delayed, including March retail sales figures, the weekly data in jobless claims and figures on consumer prices for last month.

Extended Closure

The longer the shutdown, the more time it would take government workers to catch up with the backlog of data, a government official said. A closure lasting one day would probably delay reports by a day or so, the official said.

Using the 21-day 1995-96 episode as a guide, one of the first bits of data available after federal offices reopen will probably be weekly figures on the number of Americans filing applications for jobless benefits. Claims data were released less than two weeks after offices reopened on Jan. 8, 1996.

Investors took the shuttering of government offices in stride 15 years ago.

In the month leading up to the first shutdown in November 1995, the Standard & Poor’s 500 Index climbed 1.3 percent. In the month after the January 1996 agreement that restarted the federal government, the stock index rose 4 percent. During the same periods, the Dollar Index fell 0.3 percent and rose 1.4 percent.

Past Performance

Bank of America Merrill Lynch’s U.S Treasury Master Index rose 0.3 percent during first shutdown and 0.76 percent during the second.

Investors today are more focused on Federal Reserve policy than on economic data, making a government shutdown less critical to them.

“The overriding factor in the marketplace is what the Fed is going to do, and how they’re going to do it,” said Thomas L. di Galoma, head of U.S. rates trading at Guggenheim Capital Markets LLC, a New-York based brokerage for institutional investors. “People aren’t as concerned with the government shutdown.”

The Labor Department’s employment report for March may have helped assuage concerns about the strength of the U.S. economy even as a government shutdown looms. Employers added a bigger- than-forecast 216,000 workers to payrolls, and the jobless rate fell to a two-year low of 8.8 percent.

Hiring Plans

Anecdotal evidence is reinforcing the government’s information. McDonald’s Corp.’s U.S. unit is seeking about 50,000 workers during its National Hiring Day event to commence on April 19, the company said last week.

“We all know hiring is starting to happen with or without the government telling us,” said Rick Fier, a trader at Conifer Securities LLC in New York. “Everyone is pretty much on board with the economy and labor market improving.” He said “although a shutdown is on people’s minds, it’s not on the front of their minds.”

To contact the reporter on this story: Carlos Torres in Washington at Ctorres2@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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