The Federal Reserve faces an unprecedented challenge as it prepares to set interest rates next week—making its decision with almost no economic data available.
The government shutdown has halted the release of most U.S. economic statistics, including the monthly jobs report. However, the Fed also recently lost access to one of its main private sources of backup data.
Payroll-processing giant ADP quietly stopped sharing its internal data with the central bank in late August, leaving Fed economists without a real-time measure that had covered about one-fifth of the nation’s private workforce. For years, the feed had served as a real-time check on job-market conditions between the Bureau of Labor Statistics’ monthly reports. Its sudden disappearance, first reported by the Wall Street Journal, could leave the Fed “flying blind,” former Bureau of Labor Statistics commissioner Erica Groshen said.
Groshen told Fortune that, in her decades working at the BLS and inside the Fed, the loss of ADP data is “very concerning for monetary policy.”
The economist warned that at a moment when policymakers are already navigating a fragile economy—Fed Chair Jerome Powell has said multiple times that there is no current “risk-free path” to avoid recession or stagflation—the data blackout raises the risk of serious missteps.
“The Fed could overtighten or under-tighten,” Groshen said. “Those actions are often taken too little and too late, but with less information, they’d be even more likely to be taken too little too late.”
Rupture after years of collaboration
Since at least 2018, ADP has provided anonymized payroll and earnings data to the Fed for free, allowing staff economists to construct a weekly measure of employment trends. The partnership is well-known to both Fed insiders and casual market watchers. However, according to The American Prospect, ADP suspended access shortly after Fed Governor Christopher Waller cited the data in an Aug. 28 speech about the cooling labor market.
Powell has since asked ADP to restore the arrangement, according to The American Prospect.
Representatives at ADP did not respond to Fortune’s request for comment. The Fed declined to comment.
Groshen said there are several plausible reasons why ADP might have pulled the plug. One possibility, she said, is that the company found a methodological issue in its data and wanted to fix it before continuing to share information used in monetary policy.
“That would actually be a responsible decision,” she told Fortune, noting that private firms have more flexibility than federal agencies but less institutional obligation to be transparent about errors.
Another explanation, Groshen said, could be internal or reputational pressure. After Waller mentioned the collaboration publicly, ADP may have worried about how it looked to clients or shareholders.
“You could imagine investors saying, ‘Why are we giving this away for free? The Fed has money,’” she said. The company might also have wanted to avoid being seen as influencing central-bank decisions, especially in a politically charged environment.
Whatever the motivation, Groshen said the episode underscores how fragile public-private data relationships remain. Without clear frameworks or long-term agreements, companies can withdraw at any time.
“If policymakers build systems around data that can vanish overnight,” she said, “that’s a real vulnerability for economic governance.”
A data blackout at a critical moment
The timing could hardly be worse.
On Thursday next week, the Federal Open Market Committee meets to decide whether to lower interest rates again, following a long-awaited quarter-point cut in September. With the BLS pausing most releases under its shutdown contingency plan, official figures on employment, joblessness, and wages have been delayed—starting with the September report and possibly extending into October.
In the absence of real-time data, Fed economists are relying on a patchwork of alternatives: state unemployment filings, regional bank surveys, and anecdotal reports from business contacts. Groshen called those “useful but incomplete,” adding that the lack of consistent statistical baselines makes monetary policy far more error-prone.
She advocated for the BLS to receive “multiyear funding” from Congress so that it could stay open even during government shutdowns.
“I hope that one silver lining to all these difficulties will be a realization on the part of all the stakeholders, including Congress and the public, that our statistical system is essential infrastructure that needs some loving care at the moment,” Groshen said.