Posted originally on Dec 26, 2025 by Martin Armstrong |  

NY Fed’s John Williams believes the CPI data was distorted downward. Williams stated that the economic data blackout caused by the government shutdown caused CPI figures to appear lower than reality.

“There were some special factors or practical factors that really are related to the fact that they weren’t able to collect data in October and not in the first half of November. And because of that, I think the data were distorted in some of the categories, and that pushed down the CPI reading, probably by a tenth or so,” Williams told reporters at CNBC. “It’s hard to know, we’ll get some when we’ll get to December data, I think we’ll get a better reading of how much that distortion, how big the effect was, but I do think that that was pushed down a bit by these technical factors,” he added.

CPI rose at 2.7% on an annualized basis last month, according to the delayed data produced by the Bureau of Labor Statistics. The data was collected during the second half of November when sales were prevalent. The October CPI release was not officially compiled but they provided a rough estimate based on “non survey data sources.” Obviously, it is not possible to compare November to October when the data is simply not there.

Williams has admitted what I warned all along—we cannot trust the numbers provided by the government. Yet, these numbers are used to create monetary policy despite obvious discrepancies. Williams voted in favor of a cut in December but does not feel an “urgent need” to continue easing.

Monetary authorities are trying to manage an economy they cannot measure properly. They are balancing a weakening labor market against inflation readings that they themselves confess may be inaccurate.