NextFin news, On Friday, October 3, 2025, the U.S. Bureau of Labor Statistics (BLS) suspended its September jobs report and other labor data releases due to a government shutdown. In response, the Federal Reserve Bank of Chicago provided a real-time forecast estimating the national unemployment rate at 4.34% for September, unchanged from August.
Chicago Fed President Austan Goolsbee emphasized the importance of this forecast amid the data blackout, stating, "It doesn't look like we'll get official BLS jobs data this week," highlighting reliance on alternative indicators during the shutdown.
The Chicago Fed's forecast is based on 11 labor market indicators, showing layoffs at 2.10% and hiring rates for unemployed workers at 45.22%, both slightly lower than the previous month. The model assigns a 28.2% probability that the official BLS unemployment rate remains unchanged.
Contrasting the Fed's steady outlook, private sector economists and data sources suggest a weakening labor market. Bill Adams, Chief Economist at Comerica Bank, analyzed data from Revelio Labs, Challenger, Gray & Christmas, and the Cleveland Fed’s WARN Act filings. He described the market as operating in a "low fire, low hire, low gear" mode, with layoffs remaining low but holiday hiring plans significantly reduced, posing a seasonal risk to payroll growth through the end of 2025.
Revelio Labs estimated 60,100 jobs added in September, exceeding ADP's reported decline of 32,000 jobs. However, Challenger, Gray & Christmas reported a 70% year-over-year drop in hiring intentions, and the Cleveland Fed's WARN Act index fell 22% to 14,000, indicating minimal planned layoffs.
Adams also noted broader economic pressures affecting employment, including low consumer confidence, tariff-related margin pressures, and a downturn in the auto industry following the expiration of electric vehicle subsidies. He pointed out that while artificial intelligence is driving GDP growth, it is capital-intensive and creates fewer jobs, potentially widening the gap between economic output and employment.
The ongoing government shutdown is expected to reduce GDP growth by 0.1-0.2% weekly, with Comerica forecasting a 0.25% Federal Reserve rate cut in late October to support the economy.
Financial markets responded with modest gains on Thursday, with the SPDR S&P 500 ETF Trust (SPY) rising 0.12% to $669.22 and the Invesco QQQ Trust ETF (QQQ) up 0.41% to $605.73. Futures for major indices were higher on Friday morning.
Economists and market watchers await resolution of the government shutdown to restore official labor data reporting and clarify the economic outlook heading into the critical holiday season.
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