SHUTDOWN SPINS COMPASS, GOLDMAN SACHS FINDS NORTH WITH PRIVATE DATA
Investors are cheering the possibility that the blackout period for data could soon end along with the U.S. government shutdown, but Goldman Sachs warns that the road ahead could be ridden with significant delays in processing backlogs.
Prediction markets point to the shutdown ending on Friday. Depending on when exactly it ends, Goldman expects the Bureau of Labor Statistics (BLS) to release the September employment report potentially on November 18 or 19 depending on the exact timing of reopening.
But other data releases could be delayed further. The brokerage expects the November employment and CPI reports, due December 5 and 10 respectively, to be delayed by at least a week.
The bigger news to digest is that other alternative sources including private sector data and available government data “activity growth has remained resilient outside of the government sector,” Goldman says.
On GDP, Goldman Sachs revised up its Q3 tracking estimate to 3.7% and its Q4 forecast to 1.3%, citing “slightly stronger consumer spending, capex, and exports growth than we previously assumed.” The brokerage’s quarter-on-quarter GDP growth forecast for 2025 now stands at 2%.
But that is overshadowed by the brokerage’s labor market trackers that point to job growth softening to 50,000 per month in October, from 85,000 in the previous month. After accounting for the government’s deferred resignation program, Goldman Sachs expects official non-farm payrolls to show a 50,000 decline in October – the biggest decrease since 2020.
The brokerage’s inflation forecasts, based largely on private-sector data, indicate core CPI inflation held steady at 0.24% in October.
“We continue to monitor components of GDP using data from private vendors, GS equity analysts, foreign countries, and local governments,” Walker said. Despite the direct pressure on government-related activity, these alternative indicators suggest resilience in other parts of the economy.