The government shutdown impacted key economic data reports that the Federal Reserve uses to determine a potential interest rate cut. CBS MoneyWatch correspondent Kelly O'Grady reports.

Washington

The U.S. government shutdown has resulted in the delay of critical economic data, including jobs and inflation reports, which the Federal Reserve relies on for its interest rate decisions. Without this data, the Fed faces an incomplete picture as it approaches its next meeting, raising the possibility of pausing further rate cuts until more information is available.

Additionally, President Trump is exploring the idea of distributing $2,000 tariff rebate checks to Americans, with officials indicating that collected tariff revenues could fund the initiative. While the proposal could provide financial relief and boost consumer sentiment, there are concerns it may also contribute to higher inflation, depending on the number of recipients and the total amount distributed.

Government shutdown may impact Fed decision on interest rates cuts

All right, now to CBS News Money Watch correspondent Kelly O'Grady, and she is joining us today to talk more about the economic data releases that have been delayed during this shutdown. So Kelly, what's the impact on the Fed's next interest rate decision? Yeah, this is yet another ripple effect in terms of how this is going to impact the economy. So the Fed is going to meet in just under a month. And we've talked about this before, you know, they look at the jobs data, that labor market picture, and they're also looking at a lot of inflation data. And they just simply haven't had that data coming out. We've missed the September jobs report, as well as the October jobs report. And potentially the November jobs report might be delayed because during the government shutdown, you just haven't had them collecting that data. Now, in terms of when we might get that, the White House has said we might never get the October jobs and inflation report. And at the very least, we wouldn't get the unemployment rate for the labor market. And so you think about what the Fed is going to do when they go into that room and they meet for two days. They are going to have an incomplete picture. And that was already something that was flagged as a concern at the last meeting. They did cut interest rates by a quarter point. But you've started to hear over the last few weeks, Fed members come out, do interviews and say, you know, we're feeling like we should maybe pause, wait and see. So if they do not feel like they have enough information or they feel like maybe prices are rising too much, you could just see them go, we're going to pause, we're going to wait for the new year to make any further cuts or further moves. And then that's going to impact those folks that are trying to get out of the impact of this government shutdown who would like to see lower interest rates. Wow. And President Trump, he is floating, sending $2,000 tariff rebate checks to Americans. Senate Council Director Kevin Hassett addressed the idea this morning. Let's listen to what he said. If you look at how much tariff revenue has been coming in, then there would actually be enough room to cover those checks and not go into the rest of the budget. So yeah, there would be enough money to pay for the $2,000 checks. So are you actually actively working with Congress to try to make that happen? We're actively studying the matter and getting the numbers straight. So the president has all the choices he needs to decide. All right, Kelly, I'm sure that sounds exciting. What kind of economic impact would this have? And do the numbers even make sense? So it's possible that the numbers might make sense through August, which, of course, we've had another couple of months. But the latest data that we have is through August. We have collected as U.S. government close to $200 billion in tariff revenue. And so we don't know exactly who those $2,000 checks would go out to. The president has said it wouldn't be high income. But again, where that threshold falls in terms of middle income and lower income and who would receive that, that's where it's hard to tell. Would the numbers actually math out? But in theory, it could work depending on that threshold. In terms of the economic impact, though, we know affordability is a concern for a lot of Americans. You could see that help consumer sentiment, help a little bit of the crunch in the wallet. But the flip side is that you could also see that spur higher inflation. You go back to the pandemic where you saw a number of rounds of stimulus checks, more money going into the economy means more demand, more spending and potentially higher prices. So those would be things that you'd have to weigh. But also depending on how many people would actually get those checks, how much that would impact the impact or that would impact what you would see in terms of inflation. OK, Kelly O'Grady, thank you so much for your time today.

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