US Govt Shutdown Clouds Economic Outlook: What Keeps Equities Buoyant? Ben Powell Explains
US Govt shutdown: The disruption has already delayed the release of payroll data, deepening uncertainty around the economic outlook.
The ongoing US government shutdown has so far been overshadowed by the “AI megaforce,” which continues to provide huge tailwinds for equities, said Ben Powell, Chief Investment Strategist for the Middle East and Asia-Pacific at BlackRock.
“It’s hard to say how long this will persist. Sometimes it lasts longer than a week,” Powell told NDTV Profit in an interaction, adding that economists are “flying blind” without the usual flow of data.
“Last Friday should have been weekly initial jobless claims numbers, job reports data, nonfarm payrolls data— but we did not have any numbers. The implication is that it makes life difficult for all of us, and critically for the US Federal Reserve. The Fed no longer has access to cutting-edge data,” he said.
Powell noted that the lack of updates was "not at all helpful for people trying to assess the economic outlook."
The US government shut down after President Donald Trump and Congress failed to reach a funding agreement by Oct.1 deadline, leaving hundreds of thousands of federal employees facing furloughs and forcing many offices to close.
During a shutdown, federal agencies cannot spend money beyond essential emergencies, meaning all “nonessential” functions are suspended until Congress restores funding.
The disruption has already delayed the release of payroll data, deepening uncertainty around the economic outlook. Still, swap traders remain confident that the Federal Reserve will push ahead with another quarter-point interest rate cut in October, according to Bloomberg report.
Meanwhile, the US government shutdown continued with unions representing hundreds of thousands of federal workers asking a judge to immediately block any mass firings by the Trump administration, the report further added.
On the other hand, gold rose to another record — closing in on the $4,000 an ounce mark — as the US Federal government shutdown dragged on. "Rates traders are still pricing in a quarter-point cut for the end of the month, which will benefit gold further as it doesn’t pay interest," Bloomberg report added.
