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“Don’t put too much weight on anything abnormal in October,” said Citigroup's Veronica Clark. “Take it with a grain of salt.” (Valerie Plesch/Bloomberg)

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The U.S. government shutdown threatens to erode the quality of one of the nation’s most important inflation statistics — if there even is a report at all.

Policymakers, economists and investors are already worried about how October’s consumer price index, due for release next month, will be affected by the government shutdown. While the Bureau of Labor Statistics was directed to��recall��some staff to prepare the September CPI in a rare exception, the agency hasn’t been able to collect any new price information since the Oct. 1 closure.

“Starting now, accuracy is getting worse,” Omair Sharif, president of Inflation Insights LLC, said in an Oct. 9 interview, just over a week into the shutdown. “By the third week, you’re looking at very bad quality — or no data at all.”

Of all the government data that��isn’t produced��in a lapse of funding, the CPI stands out because of the labor-intensive nature of collecting prices. The BLS gathers information about roughly����across the country,����through three 10-day periods throughout the month.

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(Bloomberg)

That was already a challenge with staffing cuts in the Trump administration — due to resource constraints, the agency has����parts of the CPI sample in recent months and consequently��leaned more��on a particular kind of imputation to fill in the blanks.

“They cannot go back to the past, so they will impute more,” said Erica Groshen, who served as BLS commissioner during the 2013 government shutdown. The staff will also probably have to work faster, or possibly put in overtime due to the compressed timeline, she said.

The agency can also re-weight categories when certain prices aren’t collected, said Michael Horrigan, who oversaw BLS’s inflation programs during that time. Should the shutdown drag on and prevent any data collection this month, the agency will observe price changes over a longer period of time, he said.

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(Bloomberg)

It won’t be perfect, but comparing prices from September to November probably isn’t that far off from what you’d observe from September-to-October and October-to-November, unless there was a dramatic change, he said.

“Capturing prices a little bit later because of the shutdown will still capture where prices are that day relative to the previous month,” said Horrigan, who now leads the Upjohn Institute for Employment Research. “And it’s a legitimate estimate of where prices have gone.”

Like any other government report in a shutdown, the September CPI — originally scheduled for release Oct. 15 — wouldn’t have come out on time, even though all data collection was completed by Sept. 30. But BLS was told to bring back workers to assemble it so the Social Security Administration could meet a deadline to make its annual cost-of-living adjustment for recipients next year. The data is��now due��Oct. 24.

While that will come in time for the Federal Reserve’s meeting at the end of this month, missing data in the shutdown — particularly for October — could make policymakers’ job more difficult, Chair Jerome Powell said at a conference Oct. 14.

“If this goes on for a while,” he said, “it could become more challenging.”

When the government shut down in 2013, the CPI was����by two weeks. The BLS said at the time that the report had a sample that was����of what was typically collected.

Since then, the agency has been gathering more of its price information, such as on gasoline and cars, from����that shouldn’t be affected by a shutdown.

���ܳ�����of prices are amassed through visits to brick-and-mortar stores. Every month, BLS sends��price collectors��all over the country to businesses like grocery stores and doctors’ offices to track a sample of goods and services that consumers spend on. That’s different from other government surveys, where companies can often directly submit their data online.

The agency isn’t always able to obtain all of the prices it aims to measure. The decline in����— which show how much usable data was actually gathered — could pose a further risk to data quality.

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(Bloomberg)

Whatever happens to the October CPI report may spill over into other releases as well. Another inflation metric produced by the Bureau of Economic Analysis and favored by the Fed uses CPI data as one of its inputs, and the November CPI could also be affected since the BLS collects some prices every other month, Morgan Stanley economists said in an Oct. 10 note.

Economists generally warn against over-interpreting any single data point, which is especially true for any of October’s reports.

“Don’t put too much weight on anything abnormal in October,” said Veronica Clark, an economist at Citigroup Inc. “Take it with a grain of salt.”