I spent much of last Sunday with my father in his garage, servicing my car’s rear brakes. The job was supposed to be quick as we’d done it before without much trouble. Worn-out parts come off, new ones go on. Simple. Instead, the work stretched on for hours because a few small springs had to be replaced in tight areas I couldn’t see well. Despite my best efforts, I misaligned one of them, and after reassembly it popped loose and partially locked up the brake. I didn’t realize anything was wrong until I was back on the road and saw smoke rising from the now non-functional brake.
Unfortunately, government officials and economists find themselves in a similar situation this week: the country has reopened, but the data needed for policy decisions is still hidden from view. For them, however, the consequences extend far beyond smoky brakes.
Despite the government’s reopening late Wednesday, markets quickly began reckoning with something far more challenging: stale economic releases and an October data blackout that may be more permanent than first assumed. September’s reports are expected in the coming days because the underlying data was collected before the shutdown began, but their usefulness will be limited due to how late they are arriving.
October’s outlook is much less certain. The surveys used to produce employment and inflation data were never completed, meaning the Bureau of Labor Statistics may be unable to publish those reports at all. Even the October Consumer Price Index (CPI), which was scheduled for release Thursday (11/14), may be nearly impossible to estimate using traditional methods. The White House went a step further this week, indicating that October’s CPI or jobs reports may never be released in full. November’s releases may also be delayed as agencies work through the backlog.
All of this creates a rare moment when the absence of data becomes meaningful market input. And once the numbers start flowing again, investors will have to contend with the noise introduced by the shutdown and embedded in releases that were once considered the definition of decision-useful.
With government data offline, private data providers temporarily took on roles as primary data sources for economic decision-making. Their informational value lies in trend direction rather than precision, as they generally move with official reports despite month-to-month variability. The October ADP private-employment report (one of a few fresh data points available this month) showed private payrolls rising by roughly 40,000 jobs. This was better than expected and reversed a two-month downturn, but it still fits within a broader cooling trend. For context, the January ADP report showed that 183,000 private-sector jobs were added. October’s reading suggests the labor market isn’t weakening dramatically, but rather slowing—and that trajectory matters for the policy decisions ahead.
Nowhere is the impact of missing data more significant than on the Federal Reserve. After cutting federal funds rates by 0.25% in October, the Federal Open Market Committee expressed trepidation regarding another rate cut in December, namely due to a lack of data confidence. Only a few weeks ago, markets were pricing in a 70%+ chance of a 0.25% rate cut in December. Those expectations, as a result of these comments, have since fallen to around 50%. Markets are also pricing in only three such cuts between now and the end of 2026. With so little clean information to work with, the Fed is hesitant to move quickly but still faces risks on both sides of the rate-cut decision. Wait too long and employment could weaken further; cut too soon and inflation could reignite. The data gap simply makes both outcomes harder to navigate.
Investors’ shifting expectations and uncertainties were most visible in the performance of technology and AI-affiliated stocks this month. On Thursday, the technology-heavy Nasdaq Composite Index fell more than 2%. On Friday morning, major AI & semiconductor names experienced heightened price volatility, trading sharply lower before reversing course and making up some of Thursday’s losses. The shutdown itself wasn’t the driver of the sector’s underperformance and volatility; the uncertainty it created was. Until the data solidifies, markets may assume the Fed will proceed cautiously, and investors will likely mirror that caution. And, when rate cuts look less certain and investors perceive heightened market volatility, they tend to move money out of high-growth investments and into companies with steadier, more diversified cash flows. The value of these stocks often rely less on macro-economic optimism or the large-scale capital spending that has supported AI & technology companies’ growth this year. Until the data pipeline normalizes and the Fed regains clearer footing, growth-heavy sectors may continue to see outsized volatility.
Takeaways for the Week:
The record-length government shutdown ended late Wednesday night
September’s economic data expected to be released in coming days, while October’s might be significantly delayed or incomplete
Data and interest rate uncertainty caused technology & AI stock prices to fall substantially on Thursday and with heightened volatility on Friday, a continuation of the market’s uncertainty and rotation into more defensive equity sectors