Customers check out at a supermarket on August 12, 2025 in New York City.
Liao Pan | China News Service | Getty Images
Friday’s consumer price index report for September will attract the full attention of financial markets, although some investors will view the data with skepticism.
With the Bureau of Labor Statistics already under scrutiny for its extensive data releases this year, the government shutdown in Washington, DC will only raise concerns among parts of Wall Street about whether inflation readings will provide a complete picture.
“Skeptics like me will focus on how clean this data is,” said Vishal Khanduja, head of broad markets fixed income at Morgan Stanley Investment Management. “What precautions were taken to compensate for the lack of full staff? What adjustments were made before the data was reported?”
In fact, the BLS has faced a host of questions about its data collection methods this year. President Donald Trump fired former BLS Commissioner Erika McEntarfer in August, angry over huge downward revisions in nonfarm payrolls data.
Although the BLS is still considered part of the “gold standard” of the U.S. economic data collection apparatus, it has also been criticized for its decidedly analog approach, which includes in-person visits, telephone calls, and written response forms.
The agency is already facing the added burden of staff cuts before the shutdown and has excluded several cities from its collection efforts. A key inflation report is currently being produced while most government agencies are closed and there is a risk that the sample data could be incomplete.
For these reasons, Khanduja believes that investors should be careful about how much emphasis they place on the CPI value.
“The effectiveness and the cleanliness of the data — I will definitely be a little skeptical, and I think the market will be the same,” he said.
Muted expectations
Despite questions about the data, economists don’t expect anything dramatic from the actual numbers.
The Dow Jones Consensus expects the CPI report to show an annual inflation rate of 3.1% for both the overall index and the core index, which excludes food and energy. Economists see the monthly headline rose 0.4% and Kern rose 0.3%, exactly in line with August’s gains.
What adds even more attention to this report is the fact that all other data collection and sharing has been suspended during the shutdown. The reason the Department of Labor recalled BLS employees is because the CPI report is used to index Social Security’s cost of living adjustments.
So other than that, there will be no further releases, leaving both investors and Federal Reserve policymakers blind to the data. That alone presents a number of problems and creates more headaches for agencies like the BLS.
“With the shutdown expected to last into November, it is not clear how the BLS will deal with an unprecedented shortage of real-time collections,” Citigroup economist Veronica Clark said in a note. “November data collections will also be increasingly affected. We will be watching to see whether guidance for October’s CPI collections may be published with Friday’s September report.”
Meanwhile, the Fed will meet next week, with markets widely expecting a quarter-percentage point cut in the federal funds rate, followed by another cut in December. Fed funds are currently at 4.00% to 4.25%.
However, there is significant uncertainty about what will happen in 2026 and beyond. Trump wants to cut interest rates significantly and is likely to nominate a candidate to replace Chairman Jerome Powell next year who follows that philosophy.
However, due to lack of data security, it will be difficult to formulate policies.
“I don’t think we’ll learn much from this [CPI] “Data we’re not seeing right now,” Mike Wilson, chief investment officer at Morgan Stanley, said on CNBC on Tuesday. “I think it will give the Fed an opportunity to do what I think it needs to do, which is to cut rates in a more meaningful way.” For me that [is] the risk that we don’t get the data that allows the Fed to make more meaningful rate cuts.”
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