Episode summary
US Core CPI Eases to Four-Year Low in Shutdown-Impacted Report
Bloomberg Surveillance
· · Guests: Stephanie Roth, Paul Ashworth, Stephen Stanley
Summary
The guest argues the November CPI print should be treated cautiously because the government shutdown and a compressed survey window likely distorted the data. She says holiday discounting appears normal, but the timing of price collection could make the report look artificially weak, and she expects a bounce back in December. Even so, her broader read is that inflation is not reaccelerating from here.
She also pushes back on the idea that the report proves a big disinflationary break. The guest says the core number was pulled down by noisy components, including airlines, apparel, lodging and transportation services, while some shelter measures and other service lines were flatter than expected. On the labor side, she says the private payroll trend remains decent, near 70,000, and the rise in unemployment is less concerning because shutdown effects and deferred resignations muddied the headline job data.
Looking ahead, she expects inflation to bounce back in the next couple of prints and sees the Federal Reserve staying on hold for much of the start of next year. On Fed leadership, she says markets would prefer Christopher Waller, whom she sees as a great pick and probably the more likely choice, while Kevin Hassett appears to be facing more hesitation.
Key takeaways
- The guest says the CPI report is too noisy to support a strong disinflation call because the shutdown and holiday timing likely skewed the data.
- She expects inflation to bounce back in December, even though she does not think prices are rising from here.
- She says private payrolls are still running near 70,000 and the labor market is holding up better than the headline job data suggest.
- The guest thinks the Fed will stay on hold for much of early 2026 if inflation and growth firm back up.
- She says markets would prefer Christopher Waller for Fed chair, and she sees him as more likely than Kevin Hassett.
Notable quotes
“I think the main thing that we have to remember is there is a lot of error in this report”
“So I would not take much away from this key thing that there is there's an issue with in the sense that when they're sampling the data specifically around November”
“I think that's entirely fair that there was this concern that around the holiday season companies wouldn't really do the typical discounting”
“I think what we'll see is inflation will bounce back in the next couple of prints”
“So if you look at the private payroll numbers, they were actually quite decent”
How the episode opens
I think the main thing that we have to remember is there is a lot of error in this report. So I would not take much away from this key thing that there is there's an issue with in the sense that when they're sampling the data specifically around November, that the survey period was was condensed until later in the month when you typically have significant holiday discounting. And when we spoke with BLF, they said they're not doing anything to adjust those seasonals.
So that automatically makes the data artificially weak and we're probably going to see a bounce back in December. Is there a trend we can take away from here? That boy, it's at least inflation is not going up from here.
Is that a fair take away? Maybe it's not cooling as much as these numbers might suggest, but it doesn't appear to be rising. I think that's entirely fair that there was this concern that around the holiday season companies wouldn't really do the typical discounting that they usually do because of the tariffs.
That doesn't appear to be the case. And we knew this heading into the data print, because if you looked at a number of different indicators that survey the companies ahead of this holiday season, it showed a normal holiday discounting year. So it doesn't appear like there was this, you know, lapse in discounting just because of tariffs.
In fact, it was a typical year for discounting. And then on top of that, you have some of the issues within the data because of the government shutdown. So Myron's been out here, Governor.
Myron, we got to lower rates, a whole bunch of other people. There's been a clear tendency within Bloomberg Surveillance of people looking at a disinflationary tendency.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- core cpi
- government shutdown data
- shelter inflation
- disinflation signal
- bls data reliability
Companies and tickers mentioned
- SAN
- Wolfe Research
- Capital Economics
- TD Securities
- William Blair
- EY-Parthenon
- Santander US Capital Markets LLC
- Banco Santander
Watch the episode
Watch “US Core CPI Eases to Four-Year Low in Shutdown-Impacted Report” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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