For six weeks, investors navigated markets without the economic data they rely on to make decisions. The 43-day government shutdown left critical releases—including jobs numbers and inflation readings—gathering dust while federal workers were furloughed. This week, the data dam breaks.
What's Coming
The week ahead is stacked with delayed reports that would normally be spread across multiple months:
- Tuesday, December 16: November nonfarm payrolls (originally scheduled for early December) and October retail sales
- Thursday, December 18: November Consumer Price Index (CPI)
These aren't just any reports. Jobs and inflation data are the two most market-moving economic releases in existence. Getting them simultaneously creates the potential for significant volatility.
Why This Matters Now
The Federal Reserve just cut rates by a quarter point to 3.5%-3.75% and signaled they're in "wait and see" mode. The problem? They made that decision with incomplete information because shutdown-furloughed federal workers couldn't measure October's inflation and unemployment.
Now the data arrives, and it could either validate the Fed's patient stance or suggest they should have been more aggressive in either direction. Fed Chair Powell explicitly noted that tariffs are causing "most of the inflation overshoot"—but without current data, that's educated guessing.
What Markets Are Watching
On Jobs: The labor market has shown resilience despite elevated rates and layoff headlines. A strong November payrolls report would suggest the economy can handle current rate levels. A weak print would raise recession concerns and potentially accelerate rate-cut expectations.
On Inflation: Core CPI has been stubbornly sticky. A hotter-than-expected November reading would validate the Fed's caution about further cuts. A cooler print would give doves ammunition to push for faster easing.
The Data Quality Question
There's an elephant in the room: data delayed is data degraded. Economic statistics work best when they're timely. Six-week-old readings about an economy that's been buffeted by Fed decisions, tariff uncertainties, and holiday spending patterns may tell us less than usual about current conditions.
Investors should treat this week's releases as important but incomplete—snapshots from a rearview mirror in a fast-moving vehicle.
How to Position
Given the uncertainty around stale data and the potential for outsized market reactions:
- Consider reducing position sizes ahead of Tuesday and Thursday releases
- Watch for asymmetric reactions (bad news mattering more than good, or vice versa)
- Pay attention to forward-looking indicators in the data, not just headline numbers
- Remember that one data point doesn't make a trend
The Bottom Line
This week's economic data dump is both highly anticipated and potentially misleading. Markets need this information to recalibrate, but the unusual timing means readings should be taken with extra grains of salt. The shutdown's disruption to economic measurement may linger in market uncertainty even after the numbers are released.
