For the first time in more than a century, American inflation statistics are about to take a turn for the worse. Because the government shutdown furloughed Bureau of Labor Statistics employees, there is no consumer price index, official cost of living measure, or market benchmark.
What the hell? So will the CPI report under the Trump administration be just smoke and mirrors? This comes at a time when many are claiming that the CPI is rigged in the US, just like it is in the Banana Republic.
Anyone who pays household bills can see cost inflation in real time, and the inflation rate is well above 3%. Economists and traders are now navigating blindly, improvising where the world’s most-watched inflation gauge once was.
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CPI inflation statistics: Is the US going crazy?
“There’s virtually no inflation,” says a billionaire politician who hasn’t had to shop at a regular store for decades.
Just as Biden was lying, so is Trump. pic.twitter.com/innsKZL1K2
— An0maly (@LegendaryEnergy) October 6, 2025
We are currently observing a typical late-cycle policy error in real time.
- Interest rates and the Fed: The Federal Reserve has begun lowering interest rates, with a target range of 4.00% to 4.25% as of September. They fear a rift in employment, exacerbating the economic slowdown.
- Inflation (sticky tail): CPI rose to 3.0% in September (headline and core). The “last mile” to 2% has failed. The Fed is easing while inflation accelerates again, a dire scenario for real bond yields and stock valuations.
- Yield curve signal: The 10-year to 2-year spread is currently positive (+0.54%). History shows that recessions begin after a curve inversion.
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The CPI, on the other hand, has tracked every rise and fall in the cost of living without interruption for more than a century. That record ends this month. Furloughs of government statisticians and the inability to collect new data are adding further pressure to an already stressful economic environment in the United States.
“Without timely inflation data, households can’t budget, businesses can’t plan, and investors are essentially trading on fiction,” said John Hill, head of U.S. inflation strategy at Barclays.
What happens next when CPI runs out? The “fallback” problem
In the absence of CPI data to anchor the market, two alternative systems have taken their place, but they do not match. The U.S. Treasury assumes inflation will continue at its average pace over the past year.
ISDA, which manages swaps, has frozen inflation at 3.01%, the level seen in October last year.
The result is a distorted market. Barclays estimates that the break-even rate for TIPS will be 3.05%, while the breakeven rate for inflation swaps will be just 1.78%, a gap large enough to disrupt a previously synchronous model.
For crypto traders, this is a breakdown in one of the world’s core pricing systems.
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Prediction markets are not optimistic. For polymarket contracts, there is less than a 30% chance that CPI data will decline by November.
Without the CPI, the Fed will go into its October meeting half-blind. Bond auctions run the risk of being distorted, and macro models could start giving false signals.
If the government shutdown drags on, the gap between TIPS and swaps could widen further, twisting the yield curve and leaving economists speculating about what’s really going on.
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Important points
For the first time in more than a century, American inflation statistics are about to take a turn for the worse. The Bureau of Labor Statistics has been furloughed.
A prolonged shutdown could widen the gap between TIPS and swaps further, distorting the yield curve.
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