• Chicago Fed President Austan Goolsbee says policymakers are navigating without crucial inflation and employment statistics
  • The government shutdown has halted releases of CPI, unemployment data, and other key indicators
  • Treasury yields fell as Goolsbee signaled a more cautious approach to potential rate cuts

Chicago Federal Reserve President Austan Goolsbee delivered a stark assessment of the central bank's current predicament, telling reporters that efforts to gauge the economy's trajectory have become significantly more challenging since the government shutdown began at the end of September. The disruption has left the Fed without access to official inflation and employment data at a critical juncture.

"The lights went out on our best source of data," Goolsbee said, referring to the Bureau of Labor Statistics' inability to release official statistics. "When it's foggy, let's just be a little careful and slow down."

The shutdown has frozen the release of critical economic indicators including unemployment data, construction spending, retail sales, producer prices, and the Consumer Price Index. This comes as the Fed attempts to assess whether the economy is in transition and determine the appropriate path for interest rates.

Goolsbee's comments reflect broader anxieties within the Federal Reserve about making monetary policy decisions without reliable data. He expressed particular concern about core services inflation, which rose 3.5% year-over-year through September—well above the Federal Reserve's 2% target. The lack of current inflation data presents a special challenge, as there are fewer private-sector alternatives for monitoring price pressures compared to labor market indicators.

Rather than operating completely blind, the Federal Reserve has developed alternative approaches. Goolsbee explained that the Chicago Fed introduced labor market indicators that combine 11 different data sources—both official and private sector—to create real-time forecasts. The Chicago Fed's unemployment rate indicator showed 4.36% for October, up marginally from 4.35% in September, suggesting relative labor market stability.

Market reaction to Goolsbee's cautious stance was immediate. Treasury markets rallied significantly, with the yield on 10-year U.S. debt falling eight basis points to 4.08% and two-year notes dropping to around 3.55%. The moves reflect investor expectations of a more dovish Federal Reserve stance amid the data uncertainty.

Financial experts interpreting Goolsbee's comments suggest the narrative of continuously falling rates may no longer be reliable. His philosophy appears to favor a "wait-and-see" approach when inflation data is unavailable, putting a damber on expectations for continued rate reductions.

The CME FedWatch Tool had indicated a 69.9% probability of a 25 basis point cut at the December Federal Open Market Committee meeting before Goolsbee's remarks. Market participants are now reassessing those expectations as Fed officials grapple with limited visibility into economic conditions.

A spokesperson for the Chicago Fed declined to comment further on Goolsbee's remarks when reached by phone Wednesday afternoon.

Correction: An earlier version of this article misstated the timing of the government shutdown. It began at the end of September 2025.