Bloomberg Talks: Former Federal Reserve Bank of Boston President Eric Rosengren on the Government Shutdown

Date: October 2, 2025
Guest: Eric Rosengren (Former Boston Fed President)
Main Theme:
Bloomberg sits down with Eric Rosengren to unpack the economic impact of an ongoing government shutdown, the complexities it creates for the Federal Reserve’s decision-making, how policymakers handle data uncertainty, and the broader risks for the US economy.

Key Discussion Points and Insights

1. Reliance on Data During a Shutdown

(02:00 - 02:39)

• Government Data Disruption: Rosengren notes the Fed typically leans on official government data, but during a shutdown, that data may not be available, forcing greater reliance on alternative sources.
• Importance of Employment Reports: The Fed values the official Employment Situation Report over private reports, but "when there's a government shutdown, you have to rely on whatever data you can get your hands on." (Eric Rosengren, 02:16)
• Increased Use of Private Data: Reports like those from ADP, Challenger, and Revelio Labs are scrutinized more closely, but their messages can conflict.

2. Comparing Private and Government Data

(02:40 - 03:19)

• Private-sector data showed contradictory signals: ADP indicated job losses, Challenger and Revelio offered a rosier employment picture.
• Rosengren describes the scenario as “not optimal,” pointing out:
  • Consumption only grew 1.6% in the year's first half—roughly half the rate of late last year.
  • Consumer confidence is "weak," as reported by the Conference Board.
  • The government workforce facing uncertainty will likely curb spending even further.

Quote:
“We already know that consumption probably won’t be all that strong...there’s a good reason to believe that consumption is going to continue to be weak. Certainly, if there are both a shutdown and layoffs, government spending in the second half of the year is also going to be weak.”
— Eric Rosengren (03:27)

3. Policy Risks at a Fed “Turning Point”

(05:28 - 07:01)

• Government shutdowns weaken GDP and amplify uncertainty.
• The Fed faces a difficult policy environment:
  • Employment is likely to be weak, but inflation remains above target (core PCE at 2.9% and projected to end the year above 3%).
  • Tariffs are starting to influence final goods’ prices.
  • The Fed’s dual mandate (employment & inflation) is being “missed” on both counts, making trade-offs even tougher.

Quote:
“It means that GDP for that quarter is going to be weaker. And if you’re at a turning point, like possibly we are now, it runs the risk that we make a mistake.”
— Eric Rosengren (06:04)

• Making a bold interest rate move without solid data would be “pretty challenging.”

Quote:
“With the data only being the ADP report, it’s pretty challenging for the Fed to make a big move without better knowledge...the Fed will be pretty tentative at this next meeting.”
— Eric Rosengren (06:42)

4. Broader Economic Impact of Furloughs

(07:01 - 08:35)

• Furloughs risk broader economic ripples:
  • About 750,000 federal workers could be affected, with more at risk if contractor funding gets pulled.
  • Uncertainty drives cuts in consumption for both government workers and contractors.
  • This is "material" and raises recession risks:
    • “Given that the economy already was weak, I think it does risk, depending on how it’s handled, having a more severe outcome than would be desirable. So the risks of a recession definitely go up.”
      — Eric Rosengren (07:59)
• The lack of data due to a shutdown “could be a serious mistake to allow the shutdown to continue for a long period of time.”

Notable Quotes & Memorable Moments

• On alternative data reliance:
  “When there’s a government shutdown, you have to rely on whatever data you can get your hands on.”
  — Eric Rosengren (02:16)

• On the weak state of the consumer:
  “We already know that consumption probably won’t be all that strong. And then we’re going into a shutdown where certainly government workers are not going to be interested in spending very much money because they don’t know when they’re going to get paid.”
  — Eric Rosengren (03:27)

• On policy uncertainty:
  “With the data only being the ADP report, it’s pretty challenging for the Fed to make a big move without better knowledge. So there’s greater uncertainty, but there’s uncertainty on both elements of the dual mandate.”
  — Eric Rosengren (06:42)

• On the risk of recession:
  “Given that the economy already was weak, I think it does risk, depending on how it’s handled, having a more severe outcome than would be desirable. So the risks of a recession definitely go up.”
  — Eric Rosengren (07:59)

Timestamps for Important Segments

• 02:00 — Official data vs. private data during a shutdown
• 03:27 — Consumption and consumer confidence in the face of uncertainty
• 05:28 — What the Fed weighs at key turning points
• 06:42 — Fed caution without reliable employment data
• 07:30 — Material impact of mass furloughs and contractors; recession risk

Summary

This episode offers a candid, high-level look at the real and immediate risks of a government shutdown as seen through the eyes of a former Fed policymaker. Rosengren emphasizes that data uncertainty materially complicates monetary policy just as the Fed is at a “turning point.” With consumption already softening, inflation too high, and labor uncertainties arising from government furloughs, the risk of recession is heightened if the shutdown prolongs. Rosengren advises caution, expecting the Fed to be tentative in the absence of clean data, and urges quick resolution to avoid compounding economic damage. The conversation retains a measured and analytical tone, highlighting the clashing realities policymakers face in such turbulent times.