The Federal Reserve cut off again! Salary service agency ADP stopped providing it with private sector labor employment data.

As the ongoing government shutdown in the United States results in a "cut-off" of official economic data, the Federal Reserve has lost yet another key source of private sector employment data, leaving decision-makers facing a greater information blind spot ahead of interest rate meetings. According to sources, the payroll services firm ADP Research has ceased providing employment data covering approximately 20% of the private sector workforce in the United States to the Federal Reserve. This occurred on August 28, after Federal Reserve Board Governor Waller referenced the data in a speech. ADP did not respond to media requests for comment, and it is currently unclear what directly caused the "cut-off." With the government shutdown, federal statistical agencies have largely stopped releasing economic data, and the interruption of ADP data further weakens the Federal Reserve's real-time understanding of the job market. The Federal Reserve is set to meet on October 28-29 to discuss another interest rate cut, and the current dilemma lies in the fact that the labor market is clearly weakening, but core inflationary pressures have not completely subsided. The Federal Reserve's data framework relies on official data, third-party surveys, and internal models. Powell mentioned collaboration with ADP in a speech in 2019, stating that they provide an "independent perspective that complements official statistics" and indicating that the data can help the central bank improve real-time employment assessments. Powell stated last week that private data "should supplement official data," but if the government shutdown continues for too long, the Federal Reserve "will start missing crucial data," making policy decisions more challenging.