Fed’s Rate Decision Hamstrung By Missing Trade Data

According to Forbes, the Federal Reserve faces an unprecedented data gap as it prepares to vote on interest rates, with critical merchandise trade statistics unavailable since September 4 due to the government shutdown. The missing August data includes the impact of new tariffs that took effect in August, which saw tariff revenue as a percentage of imports quadruple from 2.3% to over 10% within months. Key missing metrics include the effect of ending the $800 de minimis exclusion that affected $16 billion in low-value shipments, whether the trade deficit exceeded $100 billion for the fifth time this year, and whether three major import categories—gold, AI servers, and GLP-1 weight-loss drugs—are showing signs of reversal. This creates a significant blind spot for policymakers who must weigh a weakening job market against persistent inflation above the Fed’s 2% target.

The Unprecedented Data Vacuum

What makes this situation particularly concerning is that we’re witnessing a perfect storm of data deprivation at the worst possible moment for monetary policy. The Federal Reserve typically relies on a comprehensive dashboard of economic indicators, but the government shutdown has created holes in multiple data streams beyond just trade statistics. This isn’t merely inconvenient—it’s fundamentally altering the Fed’s decision-making process at a time when trade policy volatility makes these numbers more critical than ever. Historically, central banks have operated with incomplete information, but never in modern memory has such a strategically important dataset been completely unavailable during a period of such policy uncertainty.

The Tariff Impact Assessment Challenge

The missing data on tariff impacts represents more than just a statistical gap—it obscures the real-time effectiveness of trade policy as an economic tool. When President Trump initiated what he termed “Liberation Day” tariffs, the economic theory suggested this would both reduce imports and generate revenue, but without the August data, we cannot assess whether this is actually occurring. More critically, we’re missing evidence of whether these policies are achieving their stated goal of reducing the U.S. trade deficit, which the administration declared a national emergency. The fact that tariff revenue jumped from 2.3% to over 10% of imports suggests significant economic distortion, but without current data, we cannot determine if this trend is accelerating, stabilizing, or reversing.

Structural Economic Shifts in Missing Data

Three specific import categories highlighted in the missing data—gold, AI servers, and GLP-1 drugs—represent structural shifts in the economy that the Fed cannot properly assess. Gold imports typically signal market uncertainty, AI server imports reflect capital investment in transformative technology, and pharmaceutical imports indicate healthcare spending patterns. Without understanding whether these trends are continuing, accelerating, or reversing, the Fed lacks insight into fundamental economic drivers. The AI server imports particularly concern me—they represent both massive capital expenditure and potential bubble conditions in artificial intelligence infrastructure that could have significant implications for productivity and investment patterns.

The Legal and Constitutional Overhang

Perhaps the most underappreciated aspect of this situation is the constitutional question hanging over trade policy. With two lower courts having ruled that President Trump exceeded his authority using the International Emergency Economic Powers Act for tariffs, and the Supreme Court considering an expedited review, the Fed faces the bizarre scenario of setting interest rates based on policies that may be ruled unconstitutional. This creates unprecedented legal uncertainty in monetary policy decision-making. The Fed must consider whether to pause rate changes until constitutional questions are resolved, creating a scenario where judicial timelines could effectively dictate monetary policy calendars.

Forward-Looking Implications

The long-term implications of this data gap extend beyond tomorrow’s rate decision. If the Fed proceeds with rate changes based on incomplete information, it sets a concerning precedent for central bank independence and decision-making quality. More practically, it increases the likelihood of policy reversal later, which could damage market confidence and Fed credibility. The situation also highlights the vulnerability of our economic governance structure to political dysfunction—when essential tariff and trade data can be withheld due to government shutdowns, it undermines the entire framework of evidence-based policymaking. This episode may ultimately drive reforms in how economic data is collected, stored, and made available during political crises.