With the White House now reportedly requesting information from agency leaders about which critical programs would be “jeopardized” were the government shutdown to last into March or even April, and with the Senate votes set for Thursday set to muddy the waters even further, Elizabeth Warren is curious to know how it is that Jerome Powell is supposed to do his job considering he’s effectively flying blind.
The Fed has of course been keen to emphasize “data dependence” amid what appears to be the beginnings of a marked deceleration in the US economy, but it’s hard to be “data dependent” when you don’t have all the data you need thanks to the shutdown.
This is becoming a more vexing problem by the week, especially considering the fact that the longer this goes on, the more likely it is to impact the economy in a material way. On Wednesday, Kevin Hassett begrudgingly admitted that US growth could fall to zero in Q1 if the impasse inside the Beltway continues.
“While the Federal Reserve is financed independently, the bank has not been receiving crucial reports – including updated GDP growth numbers – from the Department of Commerce due to the shutdown”, Warren writes, in a letter to Jerome Powell making the rounds on Thursday.
“In addition to clouding the Fed’s ability to fulfill its dual mandate, the prolonged shutdown also threatens to damage the economy and some analysts believe the shutdown is ‘no longer just a political sideshow, it’s a real recession risk'”, she continues, adding that “if the shutdown continues, consumer spending and business investment could plummet amid concerns over the stability of the government and the economy.”
She goes on to request a list of “all reports and other sources of data” that haven’t been released to the Fed on schedule since December 22 as well as a list of the data releases that may be impacted if the shutdown continues. And that’s hardly all she said. Here’s the full letter:
Warren also sent letters to the SEC and CFTC, both of which have obviously been affected by the shutdown, with both hamstrung in various capacities.
“How has the current government shutdown affected your ability to oversee financial markets and protect investors?”, Warren asks the SEC’s Clayton, noting that the commission “appears to be unable to meet its core mission of protecting investors and ensuring a safe and efficient market.”
Who knows, maybe this is all just another example of Trump playing 9-dimensional chess, right?! I mean, he is a “stable genius”, after all.
Think about it: if the Fed has no data to work with besides the President’s unhinged Twitter feed, they’ll probably be inclined to just assume the worst in the course of leaning overtly dovish. It’s all part of Trump’s master plan to engineer rate cuts.
In any event, below, find Warren’s letters to the SEC and CFTC.