October PPI Report Skipped Due to Government Shutdown Aftermath
The Trump administration has indefinitely postponed the release of the October Producer Price Index (PPI) report, a significant economic indicator, just days before the Federal Reserve convenes to determine interest rates. The US Bureau of Labor Statistics announced on Monday that it will completely omit the October release, incorporating those figures into the November report. This combined report is now scheduled for release on January 14.
This decision is a direct consequence of the broader disruptions caused by the government shutdown, which has significantly impacted the release schedules of numerous federal data publications.
While the PPI typically does not single-handedly drive market movements in most months, it is a crucial component that directly influences the personal consumption expenditures (PCE) price index. The PCE price index is the primary inflation gauge that the Federal Reserve relies upon for its policy decisions.
With the October data erased and the November data pushed back, Federal Reserve officials will proceed with their upcoming discussions using only September data. This occurs at a critical juncture when inflation remains persistently high and risks to the job market are escalating.
Bureau of Labor Statistics Integrates Delayed PPI Data
The Bureau of Labor Statistics has confirmed its plan to combine the delayed October wholesale-price figures with the postponed November report, aiming for a mid-January release. This consolidation is part of a larger strategy to re-establish the normal flow of federal economic data following weeks of disruption.
The timing of this delay is particularly inconvenient for the Federal Reserve, which is attempting to assess inflation trends using outdated information. The absence of current producer price data complicates the assessment of current cost pressures and their trajectory.
As policymakers convened for their meeting this week, September data represented the most recent available baseline for inflation.
Amidst the stale inflation data, new insights into household sentiment were provided by the Federal Reserve Bank of New York's Survey of Consumer Expectations. Released on Monday, the survey indicated that one-year inflation expectations remained steady at 3.2% in November.
Expectations for inflation over three and five-year horizons also held firm at 3%. Concurrently, concerns about job security showed signs of easing. The perceived likelihood of losing a job decreased to 13.8%, marking the lowest point recorded this year.
Labor market sentiment improved across other metrics as well. Survey participants lowered their expectations for unemployment rates a year from now. Additionally, a greater number of respondents expressed optimism about their prospects of finding new employment should they lose their current jobs.
However, not all indicators were positive. With inflation still elevated and job security weaker compared to the previous year, an increasing number of households reported a decline in their financial well-being. The proportion of respondents indicating that their current financial situation is worse than it was a year ago rose to 39%, the highest level observed in two years.
Federal Reserve officials are still expected to vote on policy decisions on Wednesday, concluding their two-day meeting. A third consecutive interest rate cut is widely anticipated as the central bank endeavors to shield the labor market from further deterioration. Simultaneously, several policymakers have voiced concerns that tariffs could contribute to sustained higher prices. One official noted that tariffs could result in "long-lasting price pressure," a risk that continues to be monitored through inflation expectation metrics.
Federal Reserve Chair Faces Internal Dissent on Rate Cut Decisions
The anticipated policy decision comes at a time when Federal Reserve Chair Jerome Powell, whose term concludes in May, is encountering increasing opposition within the central bank. Each interest rate reduction implemented this year has been met with at least one dissenting vote, and three officials are expected to vote against the majority at this year's final meeting.
The core of the disagreement is stark: inflation remains unacceptably high, while the labor market is simultaneously losing momentum. The Federal Reserve possesses a singular primary tool to address both challenges. Jerome Powell, long recognized for his ability to foster committee unity, is now navigating the complexities of balancing these competing forces as consensus erodes.
Despite the deep respect held among committee members, the widening divergence raises significant questions for the incoming Fed chair. The next leader will inherit a committee of 18 policymakers with divisions more pronounced than those seen in recent years. While officials generally agree on the objective of lowering interest rates to a level that neither restricts economic growth nor fuels excessive demand, they are unable to reach a consensus on the precise neutral rate. This disagreement is now a driving factor behind the increase in formal dissents.
The six weeks that have elapsed since the previous Federal Reserve meeting have brought this internal rift into public view. Some officials advocated for additional rate cuts to bolster a weakening labor market. Others pushed for a pause in rate reductions as inflation proved persistent. As these positions shifted, market expectations for a December rate cut fluctuated with each public statement from Fed officials.
The balance began to tip when two officials closely aligned with Jerome Powell signaled their readiness to support another rate cut. Their public stance suggested Powell's effort to garner broader committee support for easing monetary policy. Throughout his tenure, Powell has frequently secured consensus by exchanging policy endorsements for adjustments in post-meeting messaging. The Federal Reserve has historically relied on consensus-building, utilizing forward guidance to smooth over disputes and maintain market stability.
This tradition is now under considerable strain. This month's meeting is poised to be the fourth consecutive gathering with at least one dissenting vote. If three dissents are recorded again, the Federal Reserve will accumulate a total of eight dissents across four meetings, matching the entire count from the preceding 47 meetings. This internal friction is unfolding as policymakers deliberate on interest rates amidst missing PPI data, delayed inflation inputs, fragile household finances, and a labor market that the Fed acknowledges it cannot disregard.