Bloomberg Talks Former Boston Fed President Eric Rosengren Talks Government Shutdown
Oct 2, 2025
Former Federal Reserve Bank of Boston President Eric Rosengren explores the economic fallout of a potential government shutdown. He highlights the risk of recession and the increased reliance on private data when official statistics are unavailable. The discussion includes the impact of furloughed workers on consumption and uncertainty in federal policy. Rosengren also addresses the challenges of interpreting conflicting private employment reports and the implications of rising inflation on decision-making.
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Private Data Fills Gaps During Shutdowns
- During a shutdown, policymakers must rely more on private data sources like ADP when official reports are unavailable.
- This increases uncertainty and complicates accurate economic assessment for the Fed.
Weak Demand Meets Rising Inflation
- The U.S. economy showed weaker consumption and government spending in the first half of the year, raising downside risks before the shutdown.
- Meanwhile core PCE inflation was rising toward 3%, creating a tough tradeoff for the Fed.
Favor Tentative Moves In Mixed Conditions
- Consider smaller, tentative policy adjustments (e.g., 25bps) rather than large moves when facing mixed signals from labor and inflation.
- Reserve larger hikes or cuts for instances with clearer, consistent data trends.