Seeing Through the US Shutdown: Real-Time Insights from Alternative Data
Macro Insights
QuantCube’s latest insights into the US economic outlook
Summary
The US federal government shutdown, now stretching into mid-October, has left policymakers, investors, and analysts navigating in partial darkness. With the Bureau of Labor Statistics (BLS) and the Bureau of Economic Analysis (BEA) unable to release timely data, the usual flow of official indicators – non-farm payrolls (NFP), CPI, and potentially GDP – is disrupted, just as the Federal Reserve faces critical monetary policy decisions.
Yet while official data releases stall, alternative indicators offer a real-time window into the economy. This is where QuantCube’s edge becomes clear: our high-frequency, high-granularity alternative data continues to deliver reliable, real-time estimates of macroeconomic activity, price trends, and labour dynamics – free from the delays and future revisions that now affect official statistics.
A Data Blackout at a Critical Juncture
The timing of the shutdown could hardly be worse. The FOMC meets on 29 October to consider a second consecutive rate cut following September’s easing. Yet two of the Fed’s key indicators – NFP and CPI – are either delayed or risk being produced with reduced reliability. The September jobs report was never released, the September CPI is now pushed back from 15 to 24 October, and even the Q3 GDP estimate, originally scheduled for 30 October, remains uncertain.
The result is a significant visibility gap, precisely when inflation remains sticky and labour market momentum shows signs of weakening. Markets are currently pricing a 25bp cut to the 3.75-4.00% range, with another likely in December. But without fresh hard data, much of this pricing rests on expectations rather than evidence.
Seeing Through the Fog: Real-Time Signals from Alternative Data
QuantCube’s suite of nowcasting models continues to provide a clear narrative. Our real-time GDP tracker indicates that US economic activity remains resilient at the start of Q4, running at roughly 2.3% year-on-year. Growth in consumer spending shows renewed momentum in early October, and foot traffic data – a trusted proxy for real consumption – confirms this resilience: visits to retailers remain above 2024 levels as Exhibit 1 illustrates.
On prices, our inflation nowcast shows stabilisation around 3% in October (Exhibit 2). After accelerating through late summer due to tariff pass-through to domestic prices, the pace of price growth has paused. Key drivers - rents, fuel, and used cars - suggest cost pressures are easing for now. We continue to see a high risk of fresh price pressures as companies continue passing through a share of tariff hikes to consumers.
Regarding job creation, our real-time mobility data around employment offices in Exhibit 3 shows a sustained rise in visits to employment services and American Job Centers since January. This increase in foot traffic coincides with the steady weakening in monthly NFP figures over the same period. After a brief slowdown in September, foot traffic growth has picked up again in October – though from relatively low levels.
A more granular analysis highlights the impact of DOGE-related budget measures, with particularly strong foot traffic increases in Washington D.C. and Maryland. Yet the broader national trend suggests that labour market softness is not limited to the public sector. Some signs of weakening labour demand are also visible in the private sector, although the effect remains moderate rather than systemic.
A “Goldilocks” Economy – But for How Long?
For now, our nowcasts and indicators depict an economy still in a relatively favourable regime: growth near potential, stabilising inflation (albeit at a high level and likely temporary), and a continued – but gradual – cooling in employment. This backdrop supports current market pricing of additional rate cuts and higher expected earnings.
However, the balance remains fragile. The slowdown in employment is influenced not only by cyclical demand but also by supply-side dynamics. Productivity gains – driven in part by accelerated AI in logistics, retail, and customer services – are reducing demand for routine labour. At the same time, new migration restrictions introduced by the Trump administration are constraining labour supply in lower-wage sectors.
Distinguishing demand from supply-driven weakness is crucial. If the slowdown in job creation is primarily supply-related rather than reflecting weaker aggregate demand, the Fed’s anticipated easing cycle could overshoot – particularly if inflation proves more persistent than markets currently expect.
Why Alternative Data Matters
Periods of data blackout, like the current shutdown, expose a structural vulnerability in how markets and policymakers rely on official statistics. Alternative data not only provides continuity but also delivers higher-frequency, less revised insight. As the Fed heads into its late-October meeting with limited visibility, QuantCube’s real-time indicators reveal a nuanced picture: steady economic activity, a pause in inflation acceleration, and a labour market that is adjusting rather than collapsing. When official data goes dark, alternative data keeps the lights on.
