The government shutdown is delaying another major economic report, leaving policymakers at the Federal Reserve with a cloudier picture even as the economy enters a challenging phase of stubbornly persistent inflation and a sharp slowdown in hiring. The shutdown could make things worse for agencies like the Fed if it continues, because government agencies cannot collect the raw data that are then compiled into the monthly reports on jobs, inflation, and other economic trends.

Federal Reserve Chair Jerome Powell says that a sharp slowdown in hiring poses a growing risk to the U.S. economy. Powell's comments Tuesday suggest that the Fed will likely cut its key interest rate twice more this year. Powell said in written remarks that despite the federal government shutdown cutting off official economic data, "the outlook for employment and inflation does not appear to have changed much since our September meeting," when the Fed reduced its key rate for the first time this year.

The Federal Reserve's favored inflation gauge accelerated slightly in August from a year earlier. The Commerce Department reported Friday that its personal consumption expenditures price index was up 2.7% in August from a year earlier, up from a 2.6% year-over-year increase in July and most since February. Excluding volatile food and energy prices, so-called core PCE inflation showed a 2.9% increase in prices from August 2024, same as in July. The increases were what forecasters had expected.

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Americans' view of the U.S. economy declined modestly in August as anxiety over a weakening job market grew for the eighth straight month. The Conference Board said Tuesday that its consumer confidence index ticked down by1.3 points to 97.4 in August, down from July's 98.7, but in the same narrow range of the past three months. A measure of Americans' short-term expectations for their income, business conditions and the job market fell by 1.2 points to 74.8, remaining significantly below 80, the marker that can signal a recession ahead. Consumers' assessments of their current economic situation also fell modestly, to 131.2 in August from 132.8 in July.