In this podcast, Motley Fool analyst Emily Flippen and contributors Jeff Santoro and Jason Hall talk about:

• What CPI, retail sales, and job reports say (or don't say) about consumer strength.
• How investors should think about investing given imperfect data.
• What reports are still coming, where revisions might hit, and what they're watching heading into the new year.

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A full transcript is below.

This podcast was recorded on Dec. 23, 2025.

Emily Flippen: We finally got our dump of economic data, but it's coming with a giant asterisk. We're discussing what to think about economic reports today on Motley Fool Money. Today is Tuesday, December 23rd, welcome to Motley Fool Money. I'm your host Emily Flippen, and today I'm joined by Fool analysts Jeff Santoro and Jason Hall to wade through a mess of economic reports that have been released since the government shutdown, and to discuss how investors should think about the economy heading into 2026. Now, as I'm sure all investors are aware, due to the government shutdown earlier this year, we had a pretty big gap in economic reports. From October 1st to November 12th, key data like inflation and unemployment was not collected. Now, as we head into the new year, we're finally getting some of this catch up data and a lot of that data is coming with Asterix, which we'll discuss later. But to kick it off today, let's take the data that we do have at face value and discuss what it means for consumer health and the broader economy. Jeff, I want to start with you. The initial CPI reports from November had headline inflation around 2.7% year-over-year. We're just inching closer to that fed target of 2%. The unemployment reports released, earlier this month, showed payrolls rising nearly 64,000 in November with a 4.6 unemployment rate. This is all to say, I know we'll get our next round of data in mid-January, but that data is pretty reassuring to the market. Have sowing inflation, a relatively strong employment picture, and a general stabilization in the cost of goods heading into the holiday season. But the Federal Reserve did only lower rates by about a quarter basis point. If you are sitting on the board of the Federal Reserve, are you voting for a bigger rate cut given this data?

Jeff Santoro: No, I am not. In fact, I completely understand the Fed's uneasiness and caution here. Look, even before the government shutdown, the Fed was starting to deal with what is basically the worst-case scenario for the clarity of their dual mandate. Remember, they have a dual mandate to keep inflation as close as they can to its 2% target and ensure that the job market is healthy. The problem is that cutting rates could help stimulate the job market, but cause inflation, whereas leaving rates higher could help stem inflation, but not address the job issue. They've been in this tricky spot for a while now. Now, add to that the fact that, as you pointed out, there's been this big gap in data because of the government shutdown. Caution seems like the prudent move to me. I'll also add that while there are certainly potential warning signs in parts of the economy, and we know there are people in the economy who are struggling, if we zoom out and just look at the economy as a whole, it certainly doesn't look or feel we're in any crisis deserving drastic rate cuts, so I understand the caution here.

Emily Flippen: That's, unfortunately, the awkward scenario that the Federal Reserve and economist, the federal government's been put in, right now, is that we don't have the full picture, and it's not screaming you know, this is a crisis, but it's also not screaming. The economy is doing so incredibly well. It's doing something in the middle, which sounds not the worst thing in the world, but it's certainly difficult for policymaking. Jason, one of the pieces of data that we did get retroactively, in October, was the retail sales report. It was just released last week. Did have what I would consider some troubling numbers in it. US food and retail sales in October and September were virtually flat month over month and up around 3.5% year-over-year. Now, that's not adjusted for price changes, so I imagine a lot of that's likely inflation. Now, the good news is that the e-commerce sector was comparatively strong during that period. Automobiles, not so much. But given the broader economic backdrop, did this economic report or any of the other ones tell you something about the American consumer today?

Jason Hall: I don't know that it really told us anything that altered the trends we already knew were happening. E-commerce has been growing and is expected to continue thus. We're seeing more pressure on large dollar purchases, and to some extent, we're seeing the so called K-shaped economy continue to play out. In other words, a smaller percentage of very high earners, like Jeff are driving much of the resilience and supporting consumer spending, but a large portion of consumers, like me, are having to cut back more. I also want to point out that precision is not what we should ever look for here in these reports. We're going to talk more about that as we go through the show, but the Bureau revised its previous August to September sales change. They moved it down from 0.2%-0.1% as part of the release. That sounds super duper precise. Here's the thing. The margin of error is plus or minus 0.3%. Technically, the margin of error is, actually, six times the size of the reported number. Guess what? If the margin of error is six times the size of the reported number, it's not going to be an accurate number. That's not an aberration, either. That's very normal for these reports, because by their very nature, they're using a relatively small pool of data to measure something extremely large and complex. Now, that doesn't make the report useless. Now, it's not really actionable if we're doing something like picking stocks or managing a portfolio. But there are other things that we'll talk about that it's useful for.

Emily Flippen: Jason's telling me, my question is stupid, and the solution is just to earn more money like, Jeff.

Jeff Santoro: That's right. That's always the solution.

Emily Flippen: I think, in my mind, investors are always still looking for some type of black and white. Signal, maybe I was with my question. Is the market hot? Is the economy cooling? But I think the truth is, from what we're seeing so far, the economic data that we do have is really just telling us things are lukewarm, and maybe we should just all learn to be OK with that for the time being. But I don't know about you. The market never seems to be OK with everything at any time, so we'll see where 2026 takes us. When we come back, we'll be discussing how the economic data investor sort through actually maybe distorted or potentially misleading and what you have to do when you can't trust those numbers. Stick with us.

Welcome back to Motley Fool Money. Now that we know what the economic reports say, let's pick apart the reasons. They may not matter at all. Historically, investors and economists have taken a lot of economic reports at face value. There's always been some question marks, but generally speaking, we haven't discussed whether or not the data itself is accurate. But just this month, we do have two big statements right out of the Federal Reserve's leadership team that are driving distrust. First, the jobs report, the Federal Reserve Chair Powell in December 10th speech said payroll jobs were likely overstated by the order of upwards of 60,000 jobs a month. If that is true, that would mean that through the majority of this year, the US has actually been losing jobs rather than adding. In that same speech, Powell said that the excess inflation we're seeing from goods can trace its source back to tariffs, but those tariffs are obviously hard to predict, which makes managing that inflation difficult. We have that, but at the same time, we also have Fed Governor, Stephen Miran, being even more direct. He calls out what he believes are over instated inflation metrics, noting that the excess inflation seems more tied to housing and shelter and fees rather than supply and demand dynamics. Now, interestingly, economists disagree with him. Some said the methodology for touching inflation was, actually, understating inflation due to flat lining assumptions during the government shutdown. That was such a big spill of numbers there, Jason. I don't know what to make of this. We have the Fed Chair saying employment's weaker. Then the report suggests the Fed governor saying inflation's lower, economists saying inflation is higher. All I know is my pocketbooks are hurting. What do we do with this information?

Jason Hall: Look, if I say that I trust the data or that I don't trust the data, there's a good chance you're going to make most likely political assumptions about where I'm coming from. But the reality, as when we discuss the retail sales data, these surveys and reports are by their very nature, they're working documents. The initial report always gets revised multiple times. I remember having to explain this to people a decade ago looking at a bunch of the housing survey data, and the thing is that they want to get the data as close to accurate as they can over the next year so that in a year from now, when we're going back and measuring against where we were, they have a better starting point with that data. The problem is that we expect precision, and we set ourselves up for disappointment. Guys, Peter Lynch already told us as investors, we should spend almost no time at all on macro and as time has gone by, I believe that the biggest unsaid reason for that is less about that it's useless, is that we start following whatever our own political biases are, and they creep in, and then we latch onto the latest data, and that leads us down a path that undermines our investing success. Now, that's different than economists that work at these big financial institutions, places like the Fed, advising companies that aren't really looking for precision so much as trends so that they can act and plan for their businesses accordingly. I think that Powell and his colleagues, at the Fed, are in a tough position. The bottom line is like these middling number that's the worst case scenario, because you don't have a clear path to using the tools to deal with it. The bottom line is like Jeff said earlier, that dual mandate, where we are right now with the economy and inflation and jobs, they're being pulled in opposite directions on interest rates.

Emily Flippen: We're all happy we're not working for the Federal Reserve today. But, Jeff, if both Powell and Miran are accurate, and the economy is much softer than the reports would have us believe, what should investors watch, say, for instance, if they think the labor and jobs market is weaker than it appears?

Jeff Santoro: Well, so the good news is that while we depend heavily on these government statistics, there's also a lot of private data that we can use to help verify the government statistics. That's one place that consumers can go. There's also a lot of signs that pop up in other areas of the economy. For example, we might see loan default or delinquencies tick up. Those could be signaled when the big banks and Fintech companies start reporting earnings in mid-January. One thing I'll be watching for is banks that add to their provisions for loan loss reserves, which is the money that they use to cover consumers who default or can't pay on time. That's one thing you can keep an eye on. Another thing to watch is trends in Buy now Pay Later. That has grown in popularity over the past year or so, but I think people using it to pay for everyday expenses like groceries could be a sign that things are heading in the wrong direction for the economy. Lastly, I think we can pay attention to what retailers tell us. When people lose their jobs or even start to worry about losing their jobs, you start to see discretionary spending slow, and you also start to see people trade down and buy their necessities at low cost retailers. In addition to all the private data, we get these retail signals that are worth keeping an eye on as investors, and I actually think those are a lot more helpful than the government data that comes out every month.

Emily Flippen: That's really interesting and to prevent Jason from telling me that my questions are actionless and pointless here for investors, I do want to lead off with one last question for you both before we cut to our predictions for the year ahead. If the economy is softer and we continue to see rate cuts, high unemployment, softening CPI or GDP data, is there a stock that either of you think is particularly well positioned to outperform, in the market, in that type of environment?

Jason Hall: Right at the risk of sounding like I'm calling investors that look for safety and stocks stupid, I won't do that. But I will say the reality is, if the economy softens enough that stocks do start to fall, no stock is going to be safe from losing value, particularly, in the short-term. Trying to find stocks that go up when the market falls is a great way to just end up owning underperforming businesses over the long-term because sure, we get downturns, but the market's going up 75% of the time. Instead, what I like to do is find companies whose business models are either really resilient or even decoupled from the consumer economy as much as possible. A company that I've owned for a long time that I think is a good example of this that I haven't talked about in a while, and that's why I really wanted to bring it up is CareTrust REIT, which operates in healthcare and seniors housing. It's built to hold up, and a winner like CareTrust is a great business because you really don't see it following what's going on with this consumer economy. You have a very large trend of the aging of the baby Bober generation where 65 plus and 80 plus populations are doubling over a 20-year period. There's just not enough good housing for that. CareTrust REIT owns seniors housing facilities, skilled nursing facilities, and rents it to a very small core group of really good operators. This is a yield, a dividend growth investment. The yields about 3.6% at recent prices over the past five years. That's even through the pandemic. I don't know if you remember hearing about nursing homes being shut down and just it was a brutal period for that industry. They've raised the payout 34% over the past five years. They just raised it 15% at the beginning of the year. This is about as uneconomically sensitive a business as it gets. That aging trend is really driving a lot of opportunity and just over the past decade, that's even through the pandemic. This company has delivered 18.5% annualized returns. That's better than 5X, and I think it can continue to be a winner from here.

Emily Flippen: Absolutely tickles me, Jason, that the answer to my question was actually, the question is bad, again, because to your point, if you have a stock that does well and the stock market does poorly, generally speaking, that stock does poorly because the stock market goes up over time. But CareTrust does sound really interesting. The ticker CTRE for investors who are interested in learning more. Jeff, what's on your radar?

Jeff Santoro: In the spirit of sticking with companies that do well in all economic environments, I'm going to bring two probably obvious and easy ones, but they're the first that come to mind for me. One is probably the easiest answer, which is Walmart, ticker, WMT. They're likely considered by most people to be the cheapest alternative when you need to get things like groceries and household necessities. I think Costco, ticker symbol COST could also be pretty well positioned, as well. There is a subscription membership required for Costco, but I think the value proposition that Costco offers is compelling enough to consumers that they can stomach the membership fee, even in downtimes. There's some data to back this up with both of these companies. If you go back and look at how they've done in previous downturns and recessions, they've fared pretty well compared to the general market and to Jason's earlier point, even when things are going well, people still shop at both of these retailers, and they do just fine.

Emily Flippen: Keep it simple. I like it. Walmart and Costco. Up next, we'll be looking at the year ahead and what it might have in store for us in terms of economic reports, as well as our reckless predictions for 2026. Stick with us.

Welcome back to Motley Fool Money. We'll continue to get a slew of economic data as we enter the new year here. Jobs reports are a big one that's scheduled for January 9th, and is expected to show hopefully some good data from December, and, of course, we'll continue to get reports on PPI and CPI in mid-January, alongside price indexes, which may provide some more color about the potential inflationary impact of tariffs. We are not out of the woods quite yet. But to wrap up the show, I want to put you both on the spot here to make a reckless prediction for what the economy has in store for investors in the year ahead. I'll start and then, Jason, I'll pass it to you. My prediction, I think, feels less reckless by the day. I hope I'm wrong here, but my prediction is that the Federal Reserve will cut rates too aggressively in part due to political pressure, which could erode trust in the institution and more importantly, reignite inflation. Maybe this is neat being overly paranoid, but I think with the jobs and inflation reports where they are, we're going to get a lot of pressure to grow the economy through rate cuts, but I actually don't think this is the right move because I don't think rate cuts are going to fix the job picture. That's given my belief that the disruption for the job market is probably being caused by AI. AI is eroding the numbers, rate cuts won't do anything to fix that. All that will do is increase inflation without improving employment. Now, Jason, please tell me you have a more positive outlook on the year ahead than I do.

Jason Hall: Emily, I am not your Huckleberry here. You can ask Jeff, I'm always optimistic on humanity in the long-term, but I always expect a recession in the next year. I am just wired this way. You basically said what I'm thinking. Number 1, in terms of what the Fed does, we're going to find out this spring when we find out who's going to replace Jerome Powell. But stagflation, that's my prediction. Like scary late '70s, early '80s stagflation, where the jobs market's terrible, inflation is rampant. The fed is struggling to do anything. We're already seeing artificial intelligent start to do jobs that used to go to entry level employees in a few professional fields. I'm really afraid that that trend is going to accelerate in 2026. Again, this is my short-term pessimism. But my long-term optimism is on the other side, I do think we see economic growth, which leads to job creation, but there's always growing pains along the way when there's technological disruption. Again, I think it's really tied to the case that you've already laid out.

Emily Flippen: That sounds like there's still a nice silver lining there for your look ahead, Jason, Jeff, what about?

Jeff Santoro: I'm not bringing much more happiness in mind, but I think 2026 is going to be the year of the AI backlash. If 2025 was about unencumbered AI enthusiasm, I think 2026 is going to be the year when the pendulum swings hard in the other direction. I think the proliferation of AI slop on the Internet, including deep fake videos and photos, rising electricity costs, grid instability, and mid-term elections where if there's any consumer pushback at AI, politicians are going to seize on it and make it part of their campaigns. I think all of this is going to cause a huge public backlash against AI companies, and these mega CAP tech companies that are pouring billions into CapEx, they're either going to have to pump the brakes at best or maybe slam on them at worst.

Jason Hall: Jeff, why did you have to remind me that the mid-terms were coming up?

Jeff Santoro: Sorry.

Jason Hall: Here's the thing, guys. Let's not forget last spring, 10 months ago, we all swore that tariffs were going to crash the economy, crash the stock market, and lead to rampant inflation, didn't we? Let's be honest, guys, we were wrong there. We're going to be wrong again. That's why it's fun to recklessly predict, but not invest based on those reckless predictions.

Jeff Santoro: I hope we are all wrong with these predictions.

Emily Flippen: I hope we are, too. To be clear, I would have had a very similar prediction. You could argue for 2025 and the pessimistic predictions I had last year have not turned out to be the case. If anything, the stock, S&P 500 is up over 15% for the year. You do not want to be uninvested in the stock market in general over the long-term. Stocks go up over time, regardless of how pessimistic we might be about the year ahead. Ultimately, we are just pundits talking on a podcast, and hopefully we are ultimately wrong with our predictions.

Jason Hall: But right with our stock picks.

Emily Flippen: But right with our stock picks, of course. Jeff, Jason, thank you both so much for your reckless predictions, your stock picks, and for joining today.

Jason Hall: Emily, this is great. Thanks, Emily.

Emily Flippen: As always, people on the program may have interest in the stocks they talked about in the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content falls in Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provide for informational purposes only. To see our full, advertising is closer, please check out our show notes. For Jeff Santoro, Jason Hall, and the entire Motley Fool Money team, I'm Emily Flippen. We'll see you tomorrow.