• Federal Reserve Chair Jerome Powell indicates pre-shutdown economic data suggested strengthening growth momentum
  • October 2025 government shutdown complicates economic assessment, with 750,000 federal workers furloughed
  • Labor market shows resilience with layoff rate holding at 2.09% and hiring rate for unemployed workers at 45.18%

Federal Reserve Chair Jerome Powell revealed Thursday that economic data available just before the October 2025 government shutdown pointed to a potentially firmer growth trajectory for the U.S. economy, though the ongoing federal closure has clouded the real-time picture.

Speaking amid a shutdown that has furloughed approximately 750,000 federal workers—roughly 0.4% of the civilian labor force—Powell noted that advance data from the October reference week showed underlying strength in key economic indicators. The comments suggest policymakers were seeing encouraging signals before the political impasse disrupted government operations and data collection.

"The most recent data available to us prior to the shutdown indicated the economy may have been moving onto a firmer growth trajectory," Powell said, according to people familiar with his remarks to Fed officials.

The labor market in particular showed resilience in the latest readings. The layoffs and separations rate held steady at 2.09%, virtually unchanged from the previous month, while the hiring rate for unemployed workers stood at 45.18%, down only marginally. The unemployment rate forecast for October 2025 is 4.35%, a slight increase from September's 4.34% but higher than the 4.14% recorded a year ago.

However, the shutdown has introduced significant uncertainty into economic assessments. The Congressional Budget Office has highlighted the risk that current data releases may under-represent the full effects of the government closure on economic activity. This has complicated the Fed's ability to gauge the true state of the economy as policymakers consider their next moves.

Efforts to reach Fed officials for additional comment on how the shutdown might affect monetary policy decisions were unsuccessful Thursday afternoon. Regional Federal Reserve banks have begun releasing adjusted or provisional estimates to account for the data disruption, but these remain imperfect substitutes for comprehensive official figures.

Analysts are particularly concerned about how prolonged the shutdown might become and what lasting damage it could inflict on economic momentum. While historically the U.S. economy has shown resilience to brief government closures, extended disruptions could undermine business confidence and consumer spending.

Correction: An earlier version of this article misstated the percentage of the civilian labor force affected by furloughs. The correct figure is approximately 0.4%.