Working through the Shutdown: The CPI Report 10/24/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Numbers, real numbers about the state of the economy. We're jonesing for some actual government data and we're going to get it today. The lone data point released in a government shutdown tells us price inflation in September was not only bad news for consumers. Our panel gets into it. Fundamentals, Joe, are pretty strong right now and there's no doubt about it. Speaking of shutdown, Republican Senator James Lankford on the state of the stalemate in Washington. 13 times we've had a continuing resolution where we got to the same moment.

0:41In the last 13 times, we voted to say, OK, let's keep negotiating. Let's keep it open on it. And Democrats this time just say they're mad at Trump. And Democrats leader in the House, Hakeem Jeffries, says there is blame to go around. Yeah, we haven't shut the government down. Donald Trump is the president. Republicans control the House and the Senate. Plus, layoffs at Target, another halt to trade negotiations with Canada, and can we strike for a four-day work week? My idea is to shut down Squawk Box until our demands are met. It's Friday, October 24th. This supersized Squawk Pod begins right now.

1:20Stand Becky by in three, two, one, cue it please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the NASDAQ market site in Times Square. I'm Becky Quick, along with Joe Kernan. Andrew is out today. Let's take a look at where things stand on this Friday morning. I remember what day it is on Friday. We just said this a week ago. That's the good news. Monday comes quick, but so does Friday. The only way we solve this Friday problem with Monday and everything is a four-day work week. All those in favor, aye. I think that's the only way that it's ever going to be a true weekend.

2:02And my idea is to shut down Squawk Box until our demands are met. I was going to say, hell no, we won't go, but we'd like to go. Right. Do you think that'll work? We can use that as leverage? Probably not. Do we get paid? Well, that's the question. We can maybe put one of those bills through where we continue to get paid during the shutdown. Like the congressman. They didn't do it. No, the congressman. Some of those guys do, but not the federal workers. Not the federal workers. You see LaGuardia and Newark last night? No, what happened? Planes grounded. No air traffic. Are you shocked? Would you fly?

2:44I wouldn't fly now in the next week. Not out of safety concerns, because you are going to be sitting somewhere forever. You might as well walk wherever it is. Well, maybe that's the thing that finally brings pressure. We do have Hakeem Jeffries on today. Hello. Do you blame these workers for not showing up if you're not paying them? No. Get your act together. Let's open the government. We won't get anywhere with with Leader Jeffries. I know that I've you know, when I see that he's going to be on, I try to think of a million different ways of approaching it without being a complete, you know, without really making people angry on either side.

3:22But what is it that would do it right now? What is it that Democrats want? At what point do they realize it's a pox on all their houses? Well, what are Republicans, if you were a Republican, what would you agree to do? You don't care. If you were somebody who is trying to get home to see your family member who's sick or something else that's going on, you don't care. Just open a government. If I ask Hakeem Jeffries what he wants or what Democrats want. They want you to continue funding health care. Is that all? I don't think that's all it is. I mean, that's$345 billion for 10 years. You could extend the whole thing.

3:56What they wanted cost$1.5 trillion. Do they really want that? Is it truly wishless? I like, you know, once again, what's her name? Strassel. Great piece again today. Great piece again. The ugliness after the shutdown. because this, you know, I was going to play this for Hakeem or for Leader Jeffries, but I'm not going to. Shutdowns are a byproduct of Washington dysfunction. But Democrats' intransigence on this one, their indifference to convention or consequence in their drive to impose their demands on a country they lost in the last election is unfortunate. This dysfunction can always get worse.

4:40And it is. This is as bad as I think. Second longest so far, the shutdown today. Again, not entirely sure what gets you to the path, because it doesn't sound like they're talking in any sort of constructive manner at this point. Susan Collins and the other people on appropriations are, they're ready to go with a bunch of appropriations bills to vote on. And there's even a defense bill that didn't get through that was voted on almost like a rubber stamp. It got out of committee 27 to 3 or something. That didn't pass. So nothing's and we're going to hit November 1st, which is when the subsidies.

5:14Where the enrollment ends anyway, so I think it opens. It opens. Yeah, we're going to hit November 1st. So I know there's no time to do any of the appropriations now. And then there's, you know, the thing about doing a year. In the meantime, President Trump posting on X late last night that he is terminating all trade negotiations with Canada. He said the provincial government of Ontario created an ad featuring former President Ronald Reagan speaking negatively about tariffs. He accused Canada of trying to influence a pending U.S. Supreme Court case that could doom many of its tariffs, including ones on Canada.

5:50Here is that ad. When someone says let's impose tariffs on foreign imports, it looks like they're doing the patriotic thing by protecting American products and jobs. And sometimes for a short while it works, but only for a short time. But over the long run, such trade barriers hurt every American worker and consumer. High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. Then the worst happens. Markets shrink and collapse, businesses and industries shut down, and millions of people lose their jobs. Throughout the world, there's a growing realization that the way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition.

6:44America's jobs and growth are at stake. The Ronald Reagan Presidential Foundation and Institute said that that ad misrepresents a presidential radio address that Reagan delivered in April of 1987 and that his remarks were edited without permission. The foundation did not say what was misleading. In the unedited address, though, Reagan says in certain select cases, they have taken steps to stop unfair practices against American products, but still maintained our basic long-term commitment to free trade and economic growth. He also says it's terribly important not to restrict a president's options in such trade dealings with foreign governments.

7:24Wow. Good job, CNBC. You won't see that on any other network. What, the unedited versions? Yeah, they'll just play that. And while I was watching it, God forbid that you would say it's different this time. And that's not what I'm saying. But the Reagan pointed out that the President Reagan, the worst case scenario is a trade war, which hurts everyone. And if if if that's not your intention and if that's not the end result and if it's it's getting people to the negotiating table to try to correct some longstanding, you know, trade inequities that people do take advantage of the biggest and strongest economy on Earth.

8:01We like, you know, we're throwing the party for the entire world most of the time because of what we do for global growth and everything else. So you're going to get taken advantage of. And I don't know what Reagan would say if we could channel him, maybe, and ask him. But I think those, what you said at the end, some of the, not a disclaimer, but sort of footnotes. But it's like looking at the entire argument and looking at the entire story. Exactly. And I'm sure that's what President Trump would say. Retailer Target says that it is cutting 1 ,800 corporate jobs in its first major round of layoffs in a decade.

8:42The company says that about 1 ,000 employees will be laid off and another 800 positions will no longer be filled. Combined, that is an 8 % cut to the company's corporate workforce. Target plans to notify infected employees on Tuesday. Let's walk through this a little bit. It is a big deal. These are people who are at headquarters only. And according to a letter that the incoming CEO, Michael Fidelke, who is the current COO, sent out to headquarter team members yesterday, they're asking their U.S. headquarter members to work from home next week. I guess that's when the decisions will be going out on this.

9:18He said it's going to be impacting, I believe, from what I hear, it's going to be impacting leader roles at about three times the rate of individual contributors. it is probably a necessary step that they are taking at this point. If you look back at this stock right now, you can see the one month up by 7.3%. But if you look back for the year to date, three months, it's down 10%. Year to date, it's down significantly more, almost 30%. If you look back over five years, the stock is down even more over that time period. So over five years, this company has struggled since it first took off after the pandemic.

9:53Down 40 % over the five years. When the announcement was made back in August that Fidelke would be taking over, the stock dropped once again because Wall Street was looking for an outsider to come in and really shake things up. These are some significant moves he is taking before he even becomes CEO. It's not due to become the CEO until February of next year. But he says, you know, that these are things that they have to be doing at this point. It does come with some other changes that they're trying to make pretty quickly, because, again, there's a lot of pressure on him to make changes very quickly to hopefully soothe the concerns on Wall Street.

10:30Whether it's going to be enough is a big question, but they're doing other things, too. They're going to be returning to New York Fashion Week. They've got the exclusive midnight release of Taylor Swift's new album, The Life of a Showgirl. They have partnerships with Netflix for the final season of Stranger Things. A lot of different things, investing more than$4 billion in the shopping experience this year, whatever that means. But these are all things that they are trying to do quickly because the street has had such a bad reaction to the idea that this was not going to be someone from the outside who would make significant changes.

11:00Fifth season of Strangers. Things are so strange now. But I read that. It's in the 10 point. That's what my immediate thought was. 18. I mean, it's a big company. Yeah. 1 ,800 corporate types. You know my feeling about management. I thought you would appreciate the idea that it was three times at the leader position. No, given what's happened to the company, I would have got those 18. Even if I was going to keep those positions, you got to go. The 1800 we're talking about that orchestrated what happened in the stock, we'll hire a new 1800. But then you think, how could you possibly need? I don't know.

11:39It's a big company. But it immediately reminded me. And someone mentioned a movie no one saw that you were in, Wall Street 2. But in Wall Street 1... Yes, you were trashing it yesterday. I was like, yeah, I was in that movie. I still get checks for that movie. Even you couldn't save that movie. But in the first one, during the Greed is Good speech, and Michael Douglas does stuff now for Tunnels to Towers. I love him. I loved his character in an evil sort of way, Gordon Gekko. It was Telldart Paper. And he was walking around. He said, there are more than 300 vice presidents sitting here in this room.

12:17It was a shareholder meeting. All making more than X amount of dollars a year. None of them have any idea what they're actually doing. All they're doing is using Telldart Paper to send each other memos. And that's all I can figure out what they're doing. And it reminded me of 1 ,800. So they're superfluous. 1 ,800 middle managers? Not just middle managers. but... 1 ,800? Yes, well, look... I mean, it's a big company, but they're just selling stuff, right? Off of, you know, like toilet paper. You can look at a lot of companies and there's probably a lot of bloat. Look, that's been what the Trump administration is saying about the government.

12:52There are probably a lot of corporations Yeah, and this is in the private sector. So can... All right. Anyway, it's going to be interesting to see how this plays out. Interesting to see how the street takes to it because, again, he's the chief operating officer right now. Now, he's not the CEO until February, but these changes are coming from him. And we will see how the company reacts, how the performance reacts, how the street reacts to all of it. Cheese will be next. Up next, it's here. The long-awaited and delayed monthly inflation reading, the Consumer Price Index, furloughed government workers called back to the office to prepare this key report.

13:30Wall Street is watching those numbers. And Oklahoma Republican Senator James Lankford joins us on set with his diagnosis of the government shutdown standoff. What do they want? It depends on who you ask. There are some that are in the Democrat Senate that would say they're never going to vote for a single extension for anything because they need to show their resistance to Trump.

13:55Welcome back to Squawk Pod from CNBC. I'm producer Katie Kramer. The government shutdown, now the second longest in history, has delayed most economic data points. But the September Consumer Price Index was released today after the Bureau of Labor Statistics, part of the Labor Department, called workers back in to calculate the inflation data. Now, that data is needed to determine the annual cost of living adjustment for Social Security beneficiaries. And it also comes ahead of next week's meeting of the Federal Reserve's Rate Setting Committee. The Fed is data-driven. What's it to do when there is no data?

14:31CNBC's Rick Santelli broke out the numbers on our TV broadcast this morning with Joe Kernan and Becky Quick. Here it is. Here's our late but coming out September read on the Consumer Price Index. Headline number up three-tenths, one-tenth cooler than both rearview mirror and what we were expecting. And if we look at the stripping out of food and energy known as core, it comes in also a bit less than expected, up two-tenths. We're expecting up three tenths. Our last look was up three tenths. Here's the money ball numbers. Year over year, three percent. And even though it's less than the 3.1 we're expecting, it's hotter than 2.9.

15:11And after all, it's got a three handle. And if we look at CPI year over year, X food and energy, it also comes in at three percent. We're also expecting 3.1. But last look was 3.1. So it cooled a bit. So we're seeing interest rates move down and stocks move up. You may be asking why. The easy answer, because it's less than expectations. Is it less than the Fed's target of 2 %? No, which in my opinion, that fact will rise above all the issues of the day at some point. But yes, we do see rates moving a bit lower. Ultimately, this is a very important number because the market without any data points has been pretty much viewed on the notion that the labor market is slowing, and that really is a good thing if you're looking for the Fed cycle to continue its rate cuts.

16:02Now, how does this figure in? I can't speak for Fed officials, but if you really have an agnostic view and you look at these numbers, the last thing you think about is we're closing in on the Fed's target. Joe and the gang, back to you. In a nutshell, that's exactly what people said leading up to this, Rick. It's going to be higher inflation, but it's not going to be high enough to cause the Fed to change any of its plans. My theory is, my epiphany is, is that the only honest metric we're getting about the U.S. economy now, in my opinion, is the stock market. Because I think all the professionals, I think they look at many things through the prism that's affected politically.

16:42And I think a lot of the weakness that we see showing up comes from surveys. And now I have a huge mistrust of surveys. All right. Thank you, Rick Santelli. Santelli, join us now. Oh, you're staying with us, Rick. Good. Michael Cantopoulos. I'm not going anywhere, Joe. All right. Good. Michael Cantopoulos, Richard Bernstein Advisors, Deputy Chief Investment Officer David Seif. Nomura, Chief Economist for Developed Markets. All right, General, who wants to start? So this is probably, David, this is probably about what you were expecting, is it not? Yeah, it's even a little bit softer. And so that's great news for the Fed in terms of their ability to cut in October, which didn't really seem that much in doubt, but also to follow the dot plot in December.

17:27You've had some people on the Fed who are on the more hawkish side of things who have since September pushed back on what seemed like a dovish shift. And, of course, we haven't gotten very much data since then, of course. But what little data we do have now from just now does appear to make it seem like inflation fears are at least a little bit, we're a little bit too high given what we're getting in so far. So the market has been strong, Michael, and Rick makes that point. Any AI tailwind that makes it less fundamentally based than we think? No, I think, listen, fundamentals, Joe, are pretty strong right now.

18:08And there's no doubt about it. You know, the economy is not weak per se. I mean, you've had pockets of weak. And I really do believe we're in a K-shaped economy where the lower end is maybe not quite as strong as the higher end. Today's number for me is actually about broadening more than it is about AI, although probably the first step forward is going to be more about AI and some of the momentum plays just because they are juiced by liquidity. And we do have easy financial conditions and this will sort of pretend more of that. But, you know, I think you can make an argument that you get some broadening here and it's not just about AI.

18:42Both gentlemen. Thanks, Rick. So you think eventually we're not getting a two and the Fed's going to notice that. So you think down the road this is not all all roses, better roses. Yeah, listen, I think that no matter what the Fed does, and I don't think that the Fed's necessarily going to ease because of Trump's picks, the market still can push back. The market yields are still higher than they were on that first September 24 cut. The tenure was in the 360s. The market has a life of its own, despite the Fed. All right. Thank you all.

19:18Becky's home state. Yeah, Lankford's here. Government shutdown is now on its 24th day. She's got like eight. And so do you. And the shutdown will extend. Mr. Massachusetts, California, Colorado, Cincinnati. The shutdown is going to extend into next week. The Senate has left town for the weekend without a deal. Why even stay after yesterday? You can't even pay the federal employees. Join us now for the latest. Senator James Lankford of Oklahoma. He's vice chair of the Senate Republican Conference. I watched the explanation on that, and it's just... Tortured. Trump is a bad person. That was the answer to why we can't pay the federal employees.

19:59I think specifically they said they didn't trust Donald Trump to stop picking shoes. What if you pay half of them? Is that a horrible? Pay as many as we can. We should be open. Fetterman said straight up, how can you vote against paying employees? Who we are requiring to work. Well, they did. They did. And that's been the challenge we've had along. We said over and over again, 13 times we've had a continuing resolution where we've got to the same moment. In the last 13 times, we voted to say, OK, let's keep negotiating. Let's keep it open on it. And Democrats this time just say they're mad at Trump.

20:34And so they're not going to do it at this point. And the crazy thing is they keep saying, well, this is about health care peace. Well, in 2013, as folks recall, Republicans were mad about Obamacare. We were pretty clear about it. And we had a big government shutdown. It was shorter than this one. And Democrats at that time said, we will not negotiate on health care while the government is closed. Well, now it's literally the opposite on it. That we're saying we're not going to negotiate on health care. Health care is incredibly complicated. You can't do it while people are not getting SNAP benefits.

21:02People are not getting paid. air traffic controllers aren't getting paid. You can't sit there and say, we'll do this little tweak and that's going to be enough. It's not enough. So let's actually have a real conversation about all these issues, but not while there's a shutdown. Couldn't we have been involved now in negotiations if we had done the CR three, how long was it, three weeks? No, three weeks, more than three. If we had done it three weeks ago, we'd be well into the appropriations negotiations for doing something by November 1st. Now it's almost too late to do anything. It is. So we brought three appropriation bills that we had already passed in the Senate and said, let's conference these with the House.

21:39And Democrats said, no, we're not going to do anything at all. We brought the defense appropriation bill and they said, nope, we're not going to discuss defense on this. We brought up, let's pay federal workers at least. Let's do that. And they're like, nope, we're not going to do anything. And they've done the defense bill every other time. We've done the defense bill. And it was 27-3 to get out of committee. The three bills that we had already passed that we were sitting to conference with the House, all passed unanimously. I mean, these are not controversial. This is just them digging in and saying, literally, we're not going to do anything.

22:04We're going to pay anybody. We're not going to do anything. Where's the off ramp? Because at this point, you're talking about air traffic delays, planes that were grounded, not only here in Newark, LaGuardia, I think somewhere else, too. It was Houston, Reagan National. I mean, this is the pain point where people who are not following along on a daily basis are just going to get mad about this. How does this break? How does this end? So some folks literally are saying, I'm not affected. I don't feel it at all. Anyone who's flying right now, that's the back of their head on it right now. Anyone who's a federal employee, I would tell you the federal family I know, both the husband and the wife both work for a federal agency.

22:40She is pregnant with their first child, and literally they don't have, neither of them have a paycheck right now. That story is repeated all over the country. This has a very real effect for a lot of families on it. And I know the Democratic whip in the House said that families are going to have to suffer, so we have leverage. But I just don't agree. They had nothing to do with this. I have a bill that I put out last year. We literally had 57 votes for it that would end government shutdowns forever. Just take it completely off the table. That's the right way to do it, so nobody has this. It's a total disarmament.

23:14I'd say we can't do it, and it's very simple. It just says if we get to the end of a fiscal moment like this, and we'll have another one like it, we have an automatic continuing resolution that kicks in. But members of Congress can't travel. We're in session seven days a week. There's a vote scheduled every single day and you can't do any other bill other than appropriations. It literally just locks you in the box and says Congress finished your job. But the American people are held harmless with it. So put the pressure where the pressure should be on it. And don't have federal workers and everybody flying public and everybody wondering if members of the military are getting paid.

23:48That's ridiculous. And it improves our image on the world stage. It shows we can actually get stuff done. If you believe, and I do, but if you believe what Senator Schumer's true motivations are, and he's got issues, he does. He has issues with the left flank and him being challenged. So he's got political issues. But can you tell me exactly what Democrats actually do want? Because Leader Jeffries is going to be on, and I'd like to ask him, tell me exactly what you do want. Do they want the$1.5 trillion with all the bills? That's what they brought. That's what they brought. Do they really want that?

24:26Do they want a backroom deal, which that's what people say, between Senator Schumer and the president and Senator Thune and Mike Johnson? Do they want an extension of all 10 years of the Obamacare subsidy for$345 billion? Do they want one year for whatever it is,$40 billion? What do they want? What do they want? All of those they've asked for. All of those they've asked for. for us to do that? It depends on who you ask. There are some that are in the Democrat Senate that would say they're never gonna vote for a single extension for anything because they need to show their resistance to Trump. This is all about showing their bona fides being on the far left.