JANUARY 21, 2019 – GOVERNMENT SHUTDOWN HALTS DECEMBER DATA RELEASES
Ordinarily we would be looking to last week’s data releases to assess the state of the US economy, and how this sets expectations for future interest rates and currency valuations. But due to the partial shutdown, no timely reports are being prepared. The delay in the economic releases is creating uncertainty and misinterpretation, as people look to other sources of information.
The situation before the shutdown showed strength with low gas prices and rising wages, giving the Fed the confidence to raise rates in December. But now the Fed has no idea how the latest rate hike is affecting the economy. This lack of concrete knowledge supports the wait-and-see approach the Fed is now embracing.
The feeling is, if the government reopens in the next few weeks, the impact on Q1 will not be significant. The uncertainty will be short lived, and as such, the impact on consumer spending, for example, will not be big.