Shut­down hits eco­nomic data

Re­ports on GDP, spend­ing, home build­ing face de­lays


WASH­ING­TON — The par­tial shut­down of the U.S. gov­ern­ment has be­gun to make it harder to as­sess the health of the econ­omy by de­lay­ing or dis­tort­ing key re­ports on growth, spend­ing and hir­ing.

Gov­ern­ment data on home con­struc­tion and re­tail sales, for ex­am­ple, won’t be re­leased next week be­cause staff mem­bers who com­pile those re­ports have been fur­loughed. The re­tail sales re­port pro­vides a snap­shot of con­sumer spend­ing, which fu­els more than two-thirds of the econ­omy.

In ad­di­tion, the next re­port on the econ­omy’s over­all growth, set for Jan. 30, won’t be re­leased if the shut­down re­mains in ef­fect. Even if the gov­ern­ment has fully re­opened by then, fed­eral work­ers won’t likely have had enough time to pro­duce the sched­uled re­port on the na­tion’s gross do­mes­tic prod­uct.

The shut­down is start­ing to strain the na­tional avi­a­tion sys­tem, with un­paid se­cu­rity screen­ers stay­ing home, air traf­fic con­trollers su­ing the gov­ern­ment and safety in­spec­tors off the job.

Fac­ing dou­ble the usual

num­ber of ab­sences among un­paid Trans­porta­tion Se­cu­rity Ad­min­is­tra­tion screen­ers, Mi­ami In­ter­na­tional Air­port will close one of its con­courses most of to­day, Sun­day and Mon­day to make sure the agency can ad­e­quately staff the re­main­ing se­cu­rity check­points.

“Our wait times have been nor­mal and op­er­a­tions have been smooth so far, but the par­tial clo­sure is be­ing done in an abun­dance of cau­tion,” air­port spokesman Greg Chin said Fri­day.

Other ma­jor air­ports sur­veyed by The As­so­ci­ated Press said they had no im­me­di­ate plans to close ter­mi­nals or take other mea­sures.

“We are at nor­mal op­er­a­tions. We are, though, very much mon­i­tor­ing check­points, and we’re in close con­tact with the fed­eral au­thor­i­ties and the air­lines,” said Cyn­thia Vega, a spokesman for Dal­las-Fort Worth In­ter­na­tional Air­port.

Mean­while, the na­tional union rep­re­sent­ing 10,000 air traf­fic con­trollers — who are also work­ing with­out pay dur­ing the shut­down, in its 21st day on Fri­day — sued the gov­ern­ment Fri­day, claim­ing they are il­le­gally be­ing de­nied pay.

And avi­a­tion-safety in­spec­tors are still off the job, deemed not to be es­sen­tial enough to keep work­ing dur­ing the shut­down.

Not all agen­cies are closed. Con­gress ap­proved fund­ing last year for the La­bor De- part­ment, so the gov­ern­ment’s next monthly jobs re­port will be re­leased as sched­uled on Feb. 1. But it’s un­clear how long the de­part­ment will be able to is­sue jobs re­ports — the most closely watched barom­e­ter of the econ­omy — af­ter that.

Many econ­o­mists in­creas­ingly see the shut­down, should it per­sist, as a drag on the econ­omy. Michael Feroli of JPMor­gan Chase & Co. has down­graded his fore­cast for growth in the first three months of 2019 be­cause of the shut­down. He now ex­pects the econ­omy to grow at a 2 per­cent an­nual rate, down from his pre­vi­ous es­ti­mate of 2.25 per­cent.

The shut­down is cost­ing the econ­omy about $1.2 bil­lion a week, ac­cord­ing to Stan­dard & Poor’s. Some of that loss will be re­gained af­ter fed­eral work­ers even­tu­ally re­ceive back pay for the time they missed. But many gov­ern­ment con­trac­tors won’t be made whole. And lost busi­ness — such as sched­uled ho­tel stays from trips to na­tional parks that won’t be taken — may not be made up.


Fed­eral Re­serve of­fi­cials are now stress­ing their flex­i­bil­ity on in­ter­est-rate in­creases, em­pha­siz­ing that they will be pa­tient and their pol­icy “data de­pen­dent.” By this, the Fed means that the gov­ern­ment’s lat­est read­ings on hir­ing, in­fla­tion and growth will fac­tor heav­ily in its rate de­ci­sions. Yet much of that data will now be unavail­able — to the Fed or any­one else.

“For us, one of the big­gest ef­fects of the shut­down has been around data,” Raphael Bos­tic, pres­i­dent of the Fed’s At­lanta regional bank, said Wed­nes­day. “We’re wor­ry­ing about that.”

Even some re­ports that are re­leased on sched­ule are likely to be dis­torted by the shut­down. For ex­am­ple, the Jan­uary jobs re­port may show an ar­ti­fi­cially high un­em­ploy­ment rate and low em­ploy­ment fig­ure. That’s be­cause up to 380,000 fed­eral em­ploy­ees who aren’t work­ing or be­ing paid dur­ing the shut­down — but who will re­turn to work after­ward — could be counted as un­em­ployed for Jan­uary.

If so, that would raise the un­em­ploy­ment rate by 0.2 per­cent­age point, es­ti­mated Ben Her­zon, an econ­o­mist at Macroe­co­nomic Ad­vis­ers, a fore­cast­ing firm. And the monthly job count could de­cline by 380,000 if the shut­down con­tin­ues through the end of Jan­uary, Her­zon said. That could push the monthly job fig­ure into neg­a­tive ter­ri­tory.

If all the fed­eral work­ers even­tu­ally re­ceive back pay, as oc­curred af­ter pre­vi­ous shut­downs, then the Jan­uary jobs re­port would later be re­vised to re­store those 380,000 jobs, ac­cord­ing to the La­bor De­part­ment’s Bureau of La­bor Sta­tis­tics.

Other eco­nomic re­ports have al­ready been missed. They in­clude a monthly re­port on fac­tory or­ders that was sched­uled for Mon­day. That re­port typ­i­cally pro­vides in­sights into how much U.S. com­pa­nies are spend­ing on large equip­ment.

In­fla­tion data will also be af­fected: The con­sumer price in­dex was re­leased Fri­day morn­ing as sched­uled, be­cause it was pre­pared by the La­bor De­part­ment. But the Fed’s pre­ferred in­fla­tion gauge is pub­lished by the Com­merce De­part­ment’s Bureau of Eco­nomic Anal­y­sis, which is closed.

And be­cause the Agri­cul­ture De­part­ment is closed, fu­ture re­ports on whole­sale prices and im­port prices won’t in­clude farm-re­lated data, the Bureau of La­bor Sta­tis­tics said Thurs­day.

Mean­while, the Trea­sury De­part­ment this week restarted a pro­gram that had been side­lined, al­low­ing hun­dreds of In­ter­nal Rev­enue Ser­vice clerks to col­lect pay­checks as they process forms vi­tal to the lend­ing in­dus­try.

The IRS clerks, who are paid $13-$18 an hour, process 400,000 tax tran­scripts a week — help­ing po­ten­tial home­buy­ers ver­ify their in­comes and the $1.3 tril­lion mort­gage bank­ing in­dus­try earn mil­lions of dol­lars in fees.

The hasty in­ter­ven­tion to re­store the IRS’ in­come ver­i­fi­ca­tion ser­vice by draw­ing on rev­enue from fees — even as thou­sands of other fed­eral em­ploy­ees across the coun­try are go­ing with­out their salaries — has in­ten­si­fied ques­tions about the Trump ad­min­is­tra­tion’s un­ortho­dox ef­forts to bring cer­tain gov­ern­ment func­tions back on­line.

Crit­ics, in­clud­ing many for­mer IRS of­fi­cials, de­scribed the move as an act of fa­voritism to ease the bur­den on a pow­er­ful in­dus­try.

Some large cor­po­ra­tions are jump­ing in to give a fi­nan­cial break to fed­eral work­ers — who are also their cus­tomers:

■ Ma­jor banks in­clud­ing Bank of Amer­ica Corp. and Wells Fargo & Co. are of­fer­ing to waive fees or mod­ify loans for af­fected work­ers. JPMor­gan said Thurs­day that it has been au­to­mat­i­cally waiv­ing or re­fund­ing monthly ser­vice and over­draft fees for gov­ern­ment em­ploy­ees with check­ing or sav­ings ac­counts since Dec. 24.

■ U.S. Ban­corp said Fri­day that it has cre­ated a new loan of up to $6,000 avail­able to fed­eral gov­ern­ment em­ploy­ees who are cus­tomers of the bank.

■ Toy­ota Mo­tor Corp. is of­fer­ing ex­ten­sions on car loans and leases of as much as two months, call­ing it a “broad out­reach” to fur­loughed work­ers but also con­trac­tors and sup­pli­ers and busi­nesses di­rectly af­fected by the shut­down.

■ All the big U.S. phone ser­vice car­ri­ers are pitch­ing in with pay­ment op­tions, in­clud­ing AT&T Inc., Sprint Corp. and T-Mo­bile US Inc. Ver­i­zon Com­mu­ni­ca­tions Inc., the largest wire­less car­rier in the coun­try, told af­fected cus­tomers that the com­pany is “here for you,” with op­tions to keep their ser­vices running such as a “prom­ise to pay” pro­gram that let them pay later.

On a lighter note, one com­pany got cre­ative and turned the shut­down into a busi­ness op­por­tu­nity to give un­paid fed­eral work­ers some love. Adam & Eve, a Hills­bor­ough, N.C.-based seller of sex toys and erot­ica, is of­fer­ing a special 50 per­cent dis­count for fed­eral em­ploy­ees “just in time for Valen­tine’s Day.”

Arkansas Demo­crat-Gazette/MITCHELL PE MASILUN

Toney Orr of Lit­tle Rock leads chants on Fri­day as peo­ple protest the par­tial fed­eral gov­ern­ment shut­down out­side the Vic­tory build­ing, which houses the Lit­tle Rock of­fices of U.S. Sens. Tom Cot­ton and John Booz­man. Ar­ti­cle, 1B


A Trans­porta­tion Se­cu­rity Ad­min­is­tra­tion of­fi­cer works Fri­day at a check­point at O’Hare air­port in Chicago.

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