The day began with a battle cry: "Here we go with the first of the contaminated economic data!" one Wall Street trader bemoaned. Not entirely jokingly.
The data in question? A closely watched monthly report on the nation's jobs growth from the U.S. Department of Labor. The reason it's deemed tainted? The data were slated for release more than two weeks ago, but the government shutdown threw a wrench in the works.
"The visibility of the underlying economy has now been dramatically compromised," one hedge fund trader said, citing distortions to data and the markets stemming from the recent confluence of extraordinary events in Washington, ranging from the nation's threat of default to the idling of government jobs. "The range of variability in key data is expected to be much higher, so most of the reports coming out through December are either going to have to be excessively bad or excessively good to offer any real guidance."
The snapshot of September's jobs market, which showed the nation's unemployment rate ticking down just one percentage point to 7.2 percent, should have been released October 4, but the partial government shutdown, prompted by two weeks of congressional gridlock, intervened.
During the shutdown, the bulk of the nation's federal workers charged with collecting and analyzing everything from the nation's trade data to its quarterly gross domestic product estimate - tracked closely by the world - was sent home, and it is now racing to catch up.
The damage wreaked by the government shutdown will continue in the months ahead, as Wall Street struggles to find sense in the muddled tea leaves. September's jobs data showed flat growth, signaling a loss of momentum since the first half of the year - but that picture came from the week of September 12, before the government shutdown bludgeoned the U.S. economy, so it's probably not even the worst of what's to come.
"If we lost steam in September before the shutdown, how bad will it be during the shutdown, when things were at a standstill?" says David Tawil, co-founder and portfolio manager at Maglan Capital, a New York-based hedge fund. "One thing government officials are awful at is appreciating the ripple effects of their actions on the market. We are living in a time of high drama and knee-jerk reactions instead of thoughtful deliberation. It's terrible."
A report issued by Credit Suisse this week seemed to back this up: "It will take weeks to learn what, if any, effects the fiscal showdown have had on real economic activity. Moreover, the quality of U.S. economic data for October to be released in November and beyond may be compromised."
The Bureau of Labor Statistics based its September jobs report on "a completely normal data set, processed as normal," according to spokesman Gary Steinberg, who adds that the report drew from the usual places - a monthly population survey that includes labor data from the U.S. Census Bureau, and payroll data filed automatically by companies in more than 400,000 locations across the country, detailing the number of jobs added and lost by industry.
Have any data been misplaced in the 16-day shutdown that can't be retrieved? "We don't know yet," says Steinberg. "We won't know until we've caught up more, and we are not there yet."
Most of the nation's primary economic indicators are expected to be backlogged through December, as they are produced by one of three federal agencies, many of which share or pool data: the Bureau of Labor Statistics (part of the Labor Department) and the Census Bureau and the Bureau of Economic Analysis (BEA - part of the Department of Commerce).
With the agencies sharing strands of mission-critical data that supplement one another's reports, any pipeline issues can cascade across the agencies, with untold knock-on effects.
"We do use bits and pieces of data from most of the other agencies," says Jeannine Aversa, chief of outreach for the BEA, which announced a delay in the release of third-quarter GDP data this week. "The GDP estimates alone use information from hundreds of sources, including retail sales data from the Census Bureau, jobs data from the Labor Department and information from Treasury," she says.
"Each agency is in a completely different place right now," adds Steinberg. "Some have the data; some don't. Some haven't analyzed it yet; some haven't begun to collect it."
According to a 92-page government dossier issued October 1, the day of the shutdown, the nation's wind-down furloughed nearly all its workers. At the BEA, only the director, the chief information officer and three information technology specialists remained to "ensure the protection of key intellectual property." The Labor Department retained even fewer staff.
Both Steinberg and Aversa say the delayed reports won't be dropped on the market en masse - meaning, there will be no "data dump" to catch up. Instead, the agencies will aim to space the reports out similar to their normal schedules, to the extent that is somewhat achievable.
"We definitely wouldn't put out two GDP reports at once due to a delay," Aversa says. "Usually, we space them out by one month."
This week, the BEA revised the release date of its crucial third-quarter GDP data to November 7 from October 30, but much remains in flux, says Aversa. "We're kind of doing a rolling change to our calendar," she says. "The director and staff have been burning the midnight oil since we've been back. It has just been a scramble."
With a laundry list of reports still in the pipeline with no release date in sight, government agencies will be sending updates throughout the weeks ahead. "We are publishing what we know as soon as we know it," Steinberg says. "I think by the end of this week we will have a better idea how close to the end of the year we will be when we're completely caught up."
Of course, that doesn't even begin to address what will happen in the New Year.
"While the shutdown is over, the potential for renewed fiscal dysfunction remains," says Credit Suisse, noting Washington's uneasy peace and what it described as "decidedly poor visibility."
Says Tawil, "We're getting used to the idea that things can change in the blink of an eye."