While the government shutdown has delayed data reporting, it does not mean we are operating in the dark. There are alternative private data sources. Let’s take a look at three alternatives and what they tell us about the current state of the economy.
The Redbook Index, published and updated weekly by Redbook Research Inc., shows that US consumer spending continues to increase. Per the Index, overall spending at the approximately 9,000 retailers included was up 5.7% in early November relative to the same week one year prior. This suggests the consumer is still holding up well, with no material disruption from the shutdown showing up at this point.
The government shutdown could have an outsized impact on lower-income consumers who are more dependent on assistance. This is in line with a theme of divergent outcomes that we have been emphasizing in recent years. A higher cost of essentials and elevated interest rates have taken a larger toll on lower-income brackets, who already had little left over for discretionary spending. Meanwhile those that held inflation-resistant assets such as real estate and equities and who make higher incomes were less impacted by inflation. Higher net worth consumers drive a larger share of economic activity than lower-income consumers. If you sell into consumer markets, it is important to understand who your consumer base is and where your products fit in relative to alterative products.
The US Weekly Economic Index (WEI), created by Daniel J. Lewis, Karel Mertens, and James H. Stock and published via the Federal Reserve Bank of Dallas, signals ongoing economic growth, in line with our expectations. The late-October reading is par with long-term averages and in recent months the WEI has vacillated around 2.0%–2.5%, suggesting fairly steady growth. The WEI confirms no drastic moves in economic activity since the shutdown began.
Data from the HR and payroll processing firm ADP is a very close match to the US Census Bureau’s US Total Private Employment dataset that we typically report on. The ADP’s US Nonfarm Private Employment data shows a record-high number of workers on an rolling annual basis, with growth of 1.1% from one year ago with data through September. Year-over-year growth is on the mild side, reflecting the high uncertainty and sluggish conditions earlier this year that slowed hiring. Keep in mind that employment data is a lagging indicator. It is useful in that it confirms consumers are generally employed and able to spend, but it doesn’t tell us much about what to expect in 2026.
For forward-looking evidence, we want to keep an eye on our time-tested basket of leading indicators. These guiding lights already provide insight well into 2026, telling us to plan for mild-to-moderate improvement next year.
The government shutdown will end (at some point) and the data will gradually flow in. In the meantime, we can still rely on leading indicators and our business cycle theory to inform business planning for 2026.