Private Data Models Reveal Employment Trends
Due to the U.S. federal government shutdown interrupting official labor statistics, an estimate based on private sector data released by the Chicago Fed on Monday has become an important alternative indicator for the market to assess employment conditions.
The model shows that in October, the U.S. unemployment rate remained roughly around 4.3%, consistent with the official level announced in August, indicating that the labor market is gradually cooling but has not yet shown signs of sharp deterioration.
The Chicago Fed stated that the model was constructed by combining multiple private economic indicators with real-time employment data, including state-level unemployment benefit claims, company job postings, payroll system information, and a high-frequency labor market activity index. Results indicate that while structural support for labor demand exists, overall hiring momentum has significantly weakened compared to the first half of the year.
Stable Unemployment Rate Masks Structural Fatigue
According to model estimates, the unrounded unemployment rate for September was 4.34%, in August it was 4.35%, and it fluctuated within a similar range in October.
The Chicago Fed noted that due to the absence of an official unemployment rate for September, the model used its own "real-time estimate" from the previous month as a reference baseline, making short-term errors inevitable. However, from a trend perspective, signals of a cooling U.S. job market are quite apparent.
The report also notes that initial claims for unemployment benefits in some states have moderately risen over the past three weeks, especially in the manufacturing and transportation sectors. This coincides with the recent increase in private company layoff announcements.
Analysts suggest that this change indicates a cautious trend in corporate hiring intentions, but it has not yet reached the stage of large-scale layoffs, indicating that the labor market is at the early stage of a "soft landing."
Government Shutdown Amplifies Data Blind Spots
The Chicago Fed specifically warned that if the government shutdown is prolonged, model estimates may accumulate errors due to the lack of official data calibration. However, at present, its errors remain within an "acceptable range," and the impact in the next one to three months is expected to be limited.
Economists believe that this situation poses a challenge to the Federal Reserve's policy-making. Due to the lack of official data support, decision-makers can only rely on limited private data and market signals to judge economic trends. Some analysts worry that this could lead to delayed or excessive policy responses.
Federal Reserve May Cut Rates to Address Potential Risks
The market generally expects the Federal Reserve to cut rates by another 25 basis points at the interest rate meeting held this week. Several analysts point out that this rate cut is not only a "preventive measure" against economic slowdown but also to address the potential upward pressure on unemployment rates during the winter.
Currently, Federal Reserve officials generally believe that the labor market is gradually returning to a balance of supply and demand. Recently, San Francisco Fed President Daly stated that although employment growth is slowing, it still meets sustainable levels, providing room for inflation to fall.
However, some officials worry that too many rate cuts could reignite price pressures. Kansas City Fed President Schmid warned that if policy becomes too loose, it may undermine efforts to contain inflation.
Expectations of Economic Slowdown Intensify
The Chicago Fed's report is seen as the latest "leading signal." With multiple factors such as weak manufacturing, declining consumer confidence, and slowing corporate investment interwoven, the momentum of U.S. economic growth is marginally weakening.
Bloomberg Economics noted that if the government shutdown lasts until November, the U.S. fourth-quarter GDP growth rate could be reduced by 0.3 percentage points.
Overall, although the unemployment rate remains stable, the underlying cooling trend in the labor market has become increasingly apparent. In the coming months, the Federal Reserve may balance the delicate equilibrium between employment and inflation to prevent the economy from sliding from "moderate slowdown" to "growth stagnation."
