Starting this week, all major U.S. economic news takes a backseat to the government’s fiscal negotiations.
Of immediate concern for the news outlook, one consequence of the shutdown would be the delay of the government’s scheduled economic reports. If the Department of Commerce is shut down, that could mean that reports on construction, new factory orders, and other important topics don’t come out on schedule.
The jobs report scheduled for Friday -- the most watched economic indicator -- also would be threatened, although it is important enough that the head of the Bureau of Labor Statistics has indicated that it might be given special status to ensure that it comes out whether the government is running or not.
It will be the only jobs report the Federal Reserve sees before its October meeting, when it considers whether or not to scale back its large-scale bond-purchasing program.
Major news concerning the Fed is also on hold for the shutdown. Although President Obama is expected to name a nominee to replace Chairman Ben Bernanke soon, the calendar doesn't offer many opportunities. A shutdown or a prolonged legislative battle could make it hard for Obama to name a candidate this week, and he is headed on a tour of Asia from Oct. 6 to Oct.12. When he returns, there will only be days left before the government faces the threat of a default on the debt, as Oct. 17 is the day Treasury Secretary Jack Lew has warned he will run out of the ability to create headroom under the debt ceiling.
So, the disagreements over the fiscal future of the country could mean a long wait for a Fed nominee, whether it's Janet Yellen, the Fed's vice chairman thought to be the frontrunner, or someone else.
Meanwhile, Bernanke, is scheduled to speak at a conference of the Federal Reserve Bank of St. Louis on Wednesday afternoon, an event that wouldn't be affected by a government shutdown.
If the schedule is carried out as planned, the Senate Banking Committee will hold a hearing Tuesday morning on private-label mortgage-backed securities market. This market is key to both the Senate and the House’s plans to wind down the government-run mortgage businesses Fannie Mae and Freddie Mac, which currently dominate the mortgage industry in the U.S. The same committee will also hold a hearing on American manufacturing on Wednesday afternoon.
On Tuesday morning, the House Financial Services Committee is scheduled to have a hearing on measures to reform the Consumer Financial Protection Bureau, the consumer finance regulator created by the Dodd-Frank Act. House Republicans, skeptical of the broad powers the law grants to the CFPB, want to subject it to congressional appropriations (it's currently funded by the Federal Reserve), put its employees on the federal payscale, and limit its data collection techniques.
And whether or not the government shuts down, some important private-sector reports will come out as planned. The Institute for Supply Management will release a report on the strength of manufacturing Tuesday morning. The ADP employment report for August will come out Wednesday morning, and is expected to show private payrolls expanding slightly to 180,000.