Data Blackout: Government Shutdown Delays Key Jobs Report, Clouding Fed's Rate Cut Path
The Federal Reserve's path to potential interest rate cuts has grown more opaque after a partial U.S. government shutdown led to the indefinite postponement of the January employment report, a key metric for assessing the health of the labor market.
The Bureau of Labor Statistics (BLS) confirmed to CNBC that it will not release the January jobs data, originally scheduled for February 6. "The National Employment Situation news release for January 2026 will be issued once funding is restored," said Emily Liddel, an associate commissioner at the BLS. The delay stems from a funding lapse that began over the weekend after Congress failed to pass a spending package, with Homeland Security funding being a central point of contention.
This data blackout strikes at a critical moment for the Fed. Policymakers are set to convene in March to deliberate on interest rates, and the January report—featuring nonfarm payrolls, the unemployment rate, and wage growth—was expected to be a cornerstone of their discussion. Markets had anticipated a modest gain of 55,000 jobs with unemployment holding at 4.4%.
The ripple effects extend beyond the headline jobs number. The BLS has also halted the release of the Job Openings and Labor Turnover Survey (JOLTS), and delays to Consumer Price Index (CPI) and trade data are likely, creating significant gaps in the economic picture. While House Speaker Mike Johnson expressed optimism for a resolution by Tuesday, the immediate impact on economic forecasting is acute.
"Navigating monetary policy without the most recent employment data is like flying in fog," said Michael Thorne, a former Fed economist now with the Hamilton Institute. "The Fed will now lean more heavily on December's figures, weekly jobless claims, and private-sector surveys, but these are imperfect substitutes for the comprehensive government data."
The uncertainty has already shifted market expectations. According to data from prediction market platform Polymarket, the perceived probability of the Fed holding rates steady in March has jumped to 90%, a significant increase from recent weeks. Odds for a 25-basis-point cut have dwindled to 8%.
The situation is further complicated by leadership uncertainty at the central bank. President Trump has nominated former Fed Governor Kevin Warsh to succeed Chair Jerome Powell in May. Warsh, known for his past advocacy of a strong dollar policy, introduces another variable into the rate outlook, potentially influencing risk assets including cryptocurrencies.
Despite these headwinds, financial markets continue to price in multiple rate cuts for 2026, reflecting underlying political and economic pressures for easier monetary policy. However, the Fed's reiterated commitment to a "data-dependent" approach—emphasized just last week—means the absence of reliable data inherently favors a more cautious, wait-and-see stance.
Voices from the Street
David Chen, Portfolio Manager at Clearwater Capital: "This delay is an unfortunate but manageable hurdle. The Fed has other indicators, and the underlying trend from Q4 2025 still provides a framework. It may delay a cut but shouldn't derail the broader easing cycle anticipated this year."
Rebecca Vance, Chief Economist at Midwest Bank & Trust: "The loss of timely data is a serious blow to evidence-based policymaking. It increases the risk of a policy error—either moving too soon without confirmation the labor market is cooling, or waiting too long and exacerbating economic weakness. Transparency suffers."
Marcus Johnson, host of the 'Hard Money' podcast: "This is an absolute farce. The political circus in Washington is now directly sabotaging the Fed's ability to do its job. Markets are left guessing because Congress can't do theirs. It's irresponsible and underscores why we need to depoliticize economic data collection entirely."
Source: Polymarket, BLS statements, Fed communications.