As of Monday (November 10), the U.S. government shutdown has lasted for 41 days, setting a historical record. This round of the shutdown has not only led to federal workers being furloughed and delays in food assistance but has also severely impacted air travel, putting multiple pressures on livelihoods and the economy. The shutdown may also result in the absence of the Consumer Price Index (CPI) data for October, which is scheduled to be released on November 13. If this core inflation indicator is "missing," it will weaken investors' ability to assess inflation trends and increase uncertainty in the financial markets.

This article will delve into the role, importance, and impact of the CPI, while also outlining other alternative or forward-looking inflation data indicators, and keeping an eye on the latest developments regarding the government shutdown.

The CPI is a core indicator that measures the overall level of price changes for goods and services purchased by residents, reflecting the state of inflation or deflation. It calculates the rise and fall of the overall price level by statistically analyzing the price changes of a basket of representative goods and services, serving as an important basis for assessing economic health and adjusting monetary policy.

The importance of the CPI is reflected in several aspects: first, it directly affects the cost of living and purchasing power of residents; high inflation can erode real income and reduce consumption capacity; second, investors and market participants use CPI data to gauge inflation trends and adjust their investment strategies; third, central banks also use the CPI as a core reference indicator when formulating interest rate policies and regulating the money supply.

The CPI's impact is extensive, covering various consumption areas such as food, housing, transportation, healthcare, and education. Among these, fluctuations in food and energy prices have a significant short-term impact on CPI changes, while core CPI (excluding food and energy) better reflects long-term inflation trends.

Looking back at the last data, the U.S. CPI rose 3.7% year-on-year and 0.3% month-on-month in September, indicating that inflation is still maintaining a moderate upward trend. In terms of components, energy prices increased by 1.2% month-on-month, food prices rose by 0.4%, and core CPI increased by 3.2% year-on-year, slightly above market expectations. These data suggest that although overall inflationary pressures have eased, core consumer prices still have certain support, and the market remains highly attentive to the Federal Reserve's future monetary policy.

In addition to CPI data, another important inflation-related data point, non-farm payroll data, has also been absent for two consecutive releases. The Bureau of Economic Analysis (BEA) has stopped releasing a series of data, including Gross Domestic Product (GDP), retail sales, Personal Consumption Expenditures (PCE), business investment, and trade balance. Real estate market-related data—such as new housing starts and home sales reports—have also been delayed. The release of local economic data from various states has also been affected; for example, the labor monthly report from Kansas and Washington has been announced as suspended.

Currently, many private institutions and high-frequency data sources are providing "alternative indicators" for investors, analysts, and policymakers to help assess the state of the economy. Here are several types of data and sources that are still available for reference:

1. Private employment and wage data

The ADP National Employment Report, jointly released by ADP and Stanford University, is not affected by the government shutdown. Although it differs from the official non-farm data, it can still provide insights into hiring trends and wage growth. For example, the October ADP data shows a slowdown in private sector job growth, indicating that the labor market is beginning to cool.

Indeed, LinkedIn, and ZipRecruiter job indices regularly update job postings, salary ranges, and job competition levels, reflecting companies' willingness to hire in real-time.

2. Private consumption and expenditure data

Credit card spending tracking by banks such as Bank of America, Chase, and Citi regularly publishes anonymized consumption trend reports, detailing spending changes in industries such as dining, travel, and retail. Recent data shows that U.S. consumer spending growth has significantly slowed from September to October, especially among low-income groups.

3. Commercial data from the real estate market

Redfin, Zillow, and Realtor.com provide real-time market data on price trends, inventory, and listing times. The latest data indicates that U.S. home price growth is slowing, and transaction volumes continue to decline.

Mortgage Bankers Association (MBA) loan application data is updated weekly, reflecting changes in home buying demand.

4. Market and financial data (still being updated)

Bond yields, stock indices, and inflation expectations (TIPS) reflect investors' real-time judgments about the economic outlook. For example, recent data shows a slight decline in the yield on 10-year U.S. Treasury bonds, indicating rising concerns about growth prospects.

ISM (Institute for Supply Management) manufacturing and services PMI

ISM is a non-governmental organization, and its data is released normally. The October ISM manufacturing PMI remains in the contraction range (below 50), indicating continued weakness in the manufacturing sector.

After entering the sixth week of the U.S. government shutdown, Congress has finally shown signs of breakthrough. The Senate passed a temporary funding agreement led by Republicans and supported by the White House, aimed at restoring government operations. This agreement includes a key compromise: Republicans agreed to hold a separate vote on healthcare subsidies in December.

Some centrist Democratic lawmakers accepted this proposal and voted with Republicans to support the bill, allowing it to pass the Senate's 60-vote threshold. The bill also includes funding for the Department of Veterans Affairs and the Department of Agriculture, ensuring that all federal employees receive back pay during the shutdown.

However, progress still faces challenges. The House has yet to vote, and some Democratic leaders have criticized the agreement for "making too many concessions" and lacking specific commitments on healthcare subsidies. If this plan passes smoothly, it will bring an end to the record-breaking 40-day government shutdown; if it faces further obstacles, the U.S. may encounter a new budget crisis early next year.

Related: The Federal Reserve's shift coincides with the U.S. shutdown, and market volatility may be the calm before the easing storm.

Original: “U.S. Government Shutdown Continues, CPI Data May Be Missing, Markets Turn to Private Indicators for Guidance”

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