Powell: Shutdown Clouds Fed’s View of U.S. Economy

Federal Reserve Chairman Jerome Powell warned on Wednesday that the ongoing U.S. government shutdown is making it harder for the central bank to assess the true state of the economy. The lack of key economic data, he said, has left the Fed “driving in the fog.”

Speaking after the conclusion of a two-day Federal Open Market Committee (FOMC) meeting, Powell explained that many of the indicators the Fed relies on are currently unavailable because of the shutdown. As a result, policymakers plan to move cautiously until they can get a clearer picture of economic conditions.

“If you’re driving in the fog, you slow down,” Powell said, noting that the next FOMC meeting is scheduled for December 9–10.

Despite the uncertainty, Powell emphasized that the central bank must continue its mission of maintaining economic stability. 

“We’re going to have to do our jobs one way or another,” he told reporters. “I hope that by the December meeting, we’re getting a better flow of data.”

Powell described the shutdown, now stretching into its fifth week, as a temporary situation but acknowledged its potential to delay key decisions. 

The Federal Reserve also announced its second interest rate cut of the year, aiming to support the labor market amid signs of slowing momentum. Even without the full set of employment data for September, Powell noted that the evidence so far points to relatively stable conditions in the job market. 

“Layoffs and hiring remain low, and both households and firms continue to see some softening in job availability and hiring difficulty,” he explained.

While acknowledging the lack of complete insight into the economy, Powell maintained that the Fed remains alert to any major shifts. 

“We’re not going to have the same detailed feel for the economy,” he said. “But if there were a significant change, we’d notice it.”

The Fed’s cautious tone highlights the uncertainty surrounding economic policy amid political gridlock, with analysts warning that a prolonged shutdown could slow growth and complicate monetary decisions heading into the final quarter of the year.