The Federal Reserve’s Open Market Committee starts a two-day meeting on interest rates Tuesday. Most of the government data the Fed usually considers when there’s a vote on rates isn’t available because of the shutdown, however.
We did get a tardy consumer price index report last Friday. The Fed also produces some data itself at its 12 regional divisions.
Some of that data comes from actually talking to people, and the regions all have their specialties.
Danielle DiMartino Booth is the founder and CEO of QI Research. Before that, she was an adviser at the Dallas Fed.
“Dallas is called ‘the energy Fed,’ because we have such a good handle on what is happening in the oil patch, as well as what’s happening with immigration flows and how that affects the U.S. economy,” she said.
Other Fed bank surveys cover pharmaceutical, food, and chemical manufacturing. They ask: Are you hiring or firing people? Raising prices? Do you have a backlog?
You can stitch the answers together to get a broad idea of how the economy’s doing, according to Kathy Bostjancic, chief economist at Nationwide.
“What’s happening in employment, new orders, shipments, and inflation, so it kind of offers a nice swath of data,” she said.
Then, there’s the Beige Book. It’s a mashup of lots of anecdotes from the regional Fed banks — tidbits like diners in Atlanta refusing to splurge on desserts and drinks and higher credit card delinquency rates in Saint Louis.
Some Fed banks also have hard data, according to David Wilcox, a former Fed economist, now with the Peterson Institute for International Economics. The Atlanta Fed’s GDPNow index, for example, tracks the components of gross domestic product.
“Things like monthly imports, monthly readings on retail sales,” Wilcox said. “But guess where those come from?”
Yup, that data comes from the federal agencies that are closed right now. In fact, the Atlanta Fed says its data tools that rely on those statistics might be incomplete or delayed during the shutdown. There’s a similar warning from the Chicago Fed, which isn’t able to produce its index of economic activity.
Wilcox said the Fed is on a pretty slim data diet. And “as time goes by, the basis for policy decision-making will become more shaky,” as Fed officials have to rely more and more on imperfect economic indicators like surveys and anecdotes.