So what has the shutdown done for unemployment, and other econ data?

In addition to the news from this week indicting that the US economy lost $3 billion during the shutdown that it’ll never get back, we have a new US jobs report coming out on Friday. The information for the January jobs report was compiled between the 6th and the 12th, in the middle of the shutdown, which means that 35-day folly should have an impact on that data.

So how will the 800,000 affected federal workers workers and government contractors at nearly 10,000 businesses be accounted for? Well, here’s what the Bureau of Labor Statistics said, starting with the payroll stats that are commonly used to state how many jobs were gained/lost in a given month.

Federal government employees who are working, but who will not be paid until funding is available, are included in employment counts.

· Furloughed federal employees who were not working during the reference period, but who will be paid once funding is available, are also included in employment counts.
On Wednesday January 16, 2019, the Government Employee Fair Treatment Act of 2019 was signed into law. The law requires employees of the federal government who are furloughed or required to work during the lapse in appropriations beginning on December 22, 2018, to be compensated for the period of the lapse. Because these employees will receive pay for the reference period, they will be counted as employed.

But if you were a federal contractor, and weren’t getting paid during the time your place of employment was shut down, then you are subtracted from the payroll totals, so we should see a downward effect in the January job report from that.

As for the household survey that determines the unemployment rate, the BLS says it depends if you were actually working. Whether you got paid is a secondary consideration.

Federal government employees who are working, but who will not be paid until funding is available, should be classified as employed.

· Furloughed federal employees who are not working for the entire reference week should be classified as unemployed on temporary layoff. (People on temporary layoff need not be looking for work to be counted as unemployed.)

· Similar to federal employees, any other workers who are not working for the entire reference week because of the lapse of appropriation should be classified as unemployed on temporary layoff. (People on temporary layoff need not be looking for work to be counted as unemployed.)

Employed for January? Or unemployed?

This means we would expect to see a bump in the unemployment rate for January’s report. The question is how much of one, given that workers at the TSA and several other agencies were working without pay through that time.

If we assume that ½ of the 800,000 were not working in that given week, that in itself would bump up the unemployment rate by about 0.25%. Which means we should expect unemployment to be at or above 4.0% for the first time since June for the January jobs report. And likewise, unemployment would return to its December baseline of 3.9% in February with the shutdown ending, all things being equal.

What the shutdown has also done is delay the release of some data from the Bureau of Economic Analysis. This includes the GDP by State figures that were supposed to be out today, the first report on year-end GDP for 2018 (which will not coming out tomorrow), and December’s personal income and spending figures (which was supposed to be out on Thursday).

The US Census Bureau was also part of the shut down, which means we are overdue for information on a number of business reports like construction spending and new orders in manufacturing, along with December’s retail sales report. Obviously that retail report is a big one, given the holiday shopping season and the year-end totals that set the tone for what may come for 2019’s economy. In an economy that has 70% of it relying on consumer spending, any slowdown at the end of the year is going to draw serious concern, and good figures will be a source of relief.

These delays also mean that in the next couple of weeks, we’ll get to see a lot of data coming down the pike that’s going to let us know if the 15% drop we saw in the stock market between Dec 1 and Christmas was an oddity confined to Wall Street, or a sign that the overall economy was getting shaky as well. And if the data is really bad, it makes me wonder if it’ll encourage Trump and the GOP to want to shut things down again in 2 weeks just to keep more bad news from being “out of sight, out of mind.”