A lack of economic data could leave the Fed, investors guessing
The government shutdown has delayed a key jobs report; if it drags on, there’s a risk that “the Fed gets it wrong” later this month when considering rate cuts.
For the real estate industry, no news is not good news when it comes to economic data.
The government shutdown that began Oct. 1 has led to a delay in the release of the September jobs report from the U.S. Bureau of Labor Statistics, originally scheduled for Oct. 3.
Economic unknowns: If the shutdown drags on, other key labor market and inflation reports could be delayed as well, such as the consumer price index scheduled for release on Oct. 15.
Without that data, the Federal Reserve may be wary about making any big changes to monetary policy when it meets later this month — potentially keeping mortgage rates elevated and slowing down the economy, according to Daryl Fairweather, chief economist at Redfin.
Rate cuts and recession risk: Fairweather noted that if the U.S. jobs report data had been similar to the ADP numbers that came out earlier this week — which indicated that U.S. companies shed 32,000 jobs in September — the Fed might consider a 50-basis-point cut during its late-October meeting.
"But because the Federal Reserve doesn't actually know if the numbers are that bad and can't rely on ADP alone because that data isn't as reliable as government data, they're probably going to have to move slower and only cut by 25 basis points," Fairweather said on Bluesky and other social media outlets.
"This is serious for the economy because if the Fed gets it wrong… we could be at a higher risk of recession."
What will investors do? A lack of data could force investors to guess about the direction of 10-year Treasury bonds, which tend to influence mortgage rates more than cuts to short-term interest rates.
"For housing, the absence of timely data could lead to increased sensitivity in bond markets and mortgage rates, as investors attempt to anticipate the Fed's next move using alternative data sources," said Sam Williamson, senior economist at First American.
The loss of a 'shared benchmark': Consumer confidence is also affected by data delays. If consumers don't know what's happening with the job market or inflation, they are less likely to make large purchases — like a home.
"The broader risk of losing timely official data is that it robs policymakers, markets, and households of a shared benchmark — the 'central truth' against which all alternative data are measured," said Jake Krimmel, senior economist at Realtor.com.
"In its place, we lean on less consistent indicators, which raises market volatility, makes it tougher to anticipate Fed decisions, and ultimately makes it harder for policymakers themselves to steer the economy."
Data transparency concerns in real estate: The government shutdown and subsequent data delays coincide with the ongoing debate in the real estate industry over data transparency, specifically around private listings and the Clear Cooperation Policy.
The National Association of Realtors' March decision to keep the CCP but add a delayed marketing option for listings has spurred multiple lawsuits and months of heated arguments, with one camp advocating for an open marketplace and access to all property listing data, and the other promoting seller choice and the ability of brokerages to market homes as they see fit.