Local Shopping, Macroeconomic Thinking 12/01/25

Summary

Squawk Pod Episode Summary

Episode Title: Local Shopping, Macroeconomic Thinking
Date: December 1, 2025
Hosts: Joe Kernen, Becky Quick, Katie Kramer
Key Guests: Caroline Weaver (Locavore store owner), Mohamed El-Erian (Wharton/Allianz)

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Overview

This Squawk Pod episode explores the intersection of local, small business shopping trends and the macroeconomic landscape as the holiday season kicks off. The discussion ranges from on-the-ground realities facing local shop owners like Caroline Weaver in New York, to economist Mohamed El-Erian offering insights into Federal Reserve policy, AI’s influence on markets, inequality, and how capitalism may be falling short for many Americans. The episode is laced with both humor and candid takes, capturing the season’s economic pulse.

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Key Discussion Points & Insights

1. Holiday Shopping Trends & Local Business Realities

Featuring: Caroline Weaver, Locavore Store Owner

Segment: 15:52–21:22

• Definition of "Locavore":
  Consuming goods made within 100 miles of where you are

  • Caroline Weaver explains, “It's a term used to describe people who consume locally.” (16:26)

• Portfolio of Goods:
  Weaver's shop sells a range from hand-blown glass to nail clippers and screwdrivers. "It's truly almost everything." (16:51)

• Sourcing Challenges & Global Supply Chains:
  Although goods are locally produced, many ingredients (especially packaging) are sourced internationally.

  • “Almost none of those things are made entirely of American parts...so much of the packaging that my vendors use does not come from America.” (13:52, 17:38)

• Tariffs and Pricing:
  Tariffs have made local goods relatively more attractive, but costs are still high and increases haven’t fully hit due to prior stockpiling.

  • “My prices...have increased about 10 to 15%. But I'm not as immune to it as people assume I am.” (18:06)

• Consumer Trends:
  “People are starting to shop earlier this year...consumers are a little bit anxious about supply, they're a little bit anxious about pricing, and they're trying to be strategic about their shopping.” (20:58)

• Misconception on Cost:
  The perception that local goods are automatically more expensive isn’t always true due to lower overhead and lack of big business mark-ups. (18:36)

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2. Small Business and the Political/Economic Environment

• Challenges for Small Retailers:
  “We kind of are marginalized because we exist on the fringes of a lot of these capitalist systems.” (20:19)

  • Manufacturers prioritize larger businesses during supply chain stress, impacting small business inventory availability, especially during Christmas.

• Perspectives on Governance and Systemic Change:
  Weaver expresses a willingness to consider new systems, citing the difficulties faced by small businesses:

  • “I think something has to change, and it's a really, really challenging climate for independent retail...we are open to something new.” (20:04)
  • “Affordability and safety in New York City has so much to do with what is in our storefronts.” (19:35)
  • “Whatever is happening right now also isn't working.” (19:52)

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3. Black Friday/Cyber Monday Data and Market Updates

Hosts: Joe & Becky
Segment: 08:31–13:38

• E-Commerce Growth:
  • Black Friday 2025 online sales hit a record $11.8B (Adobe), up 9%. Mastercard reports e-commerce up 10.4%. (08:31)
• Airbus Safety Fix:
  • Software issues fixed on most affected A320 jets post–solar radiation incident. (09:05)
• Data Center Outage:
  • A Chicago-area data center outage triggered a major CME market halt—a reminder of how infrastructure supports the financial system. (10:06)
• Nvidia–Synopsys $2B partnership:
  • Not just a financial investment, but an expanded effort to co-innovate new AI engineering tools (CUDA evolution). (12:22)

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4. Fed Chair Search and Macro Policy Debates

Hosts: Joe Kernen, Becky Quick, Mohamed El-Erian
Segment: Scattered from 04:28–07:59, deeply from 23:35–33:53

• Fed Succession “Soap Opera”:
  President Trump has reportedly picked a Fed Chair, speculated to be Kevin Hassett; markets reacted positively to the expectation of a dovish leadership.

  • “I think the market would like to be guaranteed of another rate cut or two.” (06:45)
  • “The market...wants somebody who is a strong, independent Fed leader.” (07:11)

• Danger of Overdependent Market:
  The hosts discuss the risk in markets desiring “easy money at whatever the cost.”

  • “Is the market that...addicted to easy money at whatever the cost?” (06:54)

• Observation on "Karens" and "Kevins":
  Both light-hearted and pointed: “Kevin is the male Karen, supposedly.” (02:02, 07:59)

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5. Macroeconomic Analysis with Mohamed El-Erian

Segment: 23:35–33:53

a) Market Sentiment and Fundamentals

• Shifting Market Dynamics:
  “Trade has become more differentiated...People have understood that vertical integration matters...AI being much more fundamentally driven than hype driven.” (23:54)

• On AI & Data Centers:

  • AI is causing a real shift in demand shaping GDP, preventing a “store speed” scenario in the economy.
    • “If it weren't for AI-related [demand] we would be talking about store speed because the rest of the economy is having a harder time.” (25:22)
  • Profitability from AI investment will depend on adoption, not just building tools:
    • “[We] need an adoption policy...That’s why we risk falling behind China.” (26:43)

b) On the Federal Reserve & Reform Needs

• Central Issues:

  • “We are captivated right now, understandably, by two things. Will they cut this month or not? And who will be the next Fed chair?” (01:34, 28:29)
  • “As important is, how will this Fed be reformed? This Fed went to sleep.” (01:34, 28:29)

• Call for Change at the Fed:

  • “The compliance culture has to improve...the Fed is so central to our economic well-being.” (28:29)
  • “We don't need a play-by-play Fed. We need the Fed to cool it, step back and take a visionary view...We desperately need reforms.” (29:06)

• Market Expectations are Volatile:

  • “In the last month the probability of a December cut has gone from 90% to 30%, back up to 86 or 87...This should not happen. The whole point of forward guidance is predictability.” (29:57)

c) On Capitalism, Inequality, and Institutional Failure

• Generational Disillusionment:
  Joe: “If 51% of people under 30 think socialism is...preferable to capitalism, how does that work itself out as time goes by?” (30:18)

• El-Erian’s Diagnosis:

  • “Young people...feel the system doesn’t work...We didn’t pay enough attention to not just what is necessary—market-based capitalism—but what’s necessary and sufficient, which is also to recognize that there are market failures.” (30:51)
  • “If you don’t address the failures, the people who are left out come back and undermine the whole system.” (31:36)
  • Calls to address monopoly power, productivity, and infrastructure: “We've got to also look at how to make sure that the productivity promise that’s ahead of us is something that is offered by many.” (32:04)

• Affordability & Real Income:
  Inflation under Biden: “21 and a half percent... is why we have an affordability [crisis]...The key to affordability is going to be income. Wages have to go up.” (33:26–33:48)

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Notable Quotes & Memorable Moments

• On the paradox of “local”:
  Caroline Weaver: “All of my things are local, but almost none of those things are made entirely of American parts... a lot of it is packaging. So much...does not come from America.” (13:52, 17:38)

• On resilience of small business:
  “We are marginalized because we exist on the fringes of a lot of these capitalist systems.” (20:19)

• On Fed predictability:
  Mohamed El-Erian: “This should not happen. The whole point of forward guidance is predictability and stability.” (29:57)

• On systemic dissatisfaction:
  Mohamed El-Erian: “If you don’t address the failures, the people who are left out come back and undermine the whole system.” (31:36)

• Market commentary as humor:
  Joe Kernen: “Kevin is the male Karen, supposedly.” (02:02)
  Becky Quick: “I just call the male versions Karen, too.” (02:05, 08:19)

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Timeline of Key Segments

| Timestamp | Segment | |-----------|----------------------------------------------------------------------------------------| | 01:04 | Episode intro: shopping season, Caroline Weaver interview, macro talk with El-Erian | | 08:31 | Black Friday/Cyber Monday data, e-commerce trends | | 15:52 | Caroline Weaver interview: local shopping, tariffs, small business challenges | | 23:35 | Mohamed El-Erian interview: market fundamentals, AI, Fed policy, economic reforms | | 32:35 | Discussion on capitalism vs. socialism, market and institutional failures |

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Conclusion

This episode weaves together the grassroots reality faced by local business owners and the global complexities of 2025’s markets and economic policy. Localists like Caroline Weaver face persistent challenges from global supply chains and systemic pressures, while Mohamed El-Erian warns that both market and government failures must be directly addressed to maintain social and economic stability—especially as younger generations lose faith in the status quo.

Squawk Pod captures the anxiety, wit, and optimism swirling around the 2025 holiday economy, leaving listeners with an essential snapshot of both consumer and macro perspectives as the year closes.

Transcript

[Becky Quick]

We all take good care of the things that matter.

[Joe Kernan]

Our homes, our pets, our cars.

[Becky Quick]

Are you doing the same for your brain? Acting early to protect brain health may help reduce the risk of dementia from conditions like Alzheimer's disease. Studies have found that up to 45% of dementia cases may be prevented or delayed.

[Caroline Weaver]

By managing risk factors, you can change.

[Becky Quick]

Make brain health a priority. Ask your doctor about your risk factors and for a cognitive assessment, learn [e-mail].

[Andy Richter]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview, delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update. Wherever you get your podcasts.

[Mohamed El-Erian]

Bring in show music, please.

[Katie Kramer]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, Black Friday, small business Saturday, Cyber Monday, Travel Tuesday. Shopping season is in full swing. Small business owner Caroline Weaver operates the locavore in New York.

[Caroline Weaver]

Local doesn't just mean cottage industry goods. It means actually manufactured things.

[Katie Kramer]

And a big picture conversation on the market and regulation themes of 2025 with economist Mohamed El Arian.

[Mohamed El-Erian]

We are captivated right now, understandably, by two things. Will they cut this month or not? And who will be the next Fed chair? As important is, how will this Fed be reformed? This Fed went to sleep.

[Katie Kramer]

Plus the rest of today's news in video. Taking another $2 billion stake this time. In synopsis, Airbus says it has fixed all its planes affected by a safety alert. And a new Fed chair has been picked, but we still don't know who it is. Is it a Kevin?

[Joe Kernan]

But Kevin is the male Karen, supposedly.

[Becky Quick]

Really? I just called the male versions Karen, too.

[Joe Kernan]

Yeah.

[Katie Kramer]

It's Monday, December 1st, 2025. Squawk Pod begins right now.

[Mohamed El-Erian]

Stand back. Goodbye.

[Andy Richter]

In three, two, one.

[Mohamed El-Erian]

Cuba, please.

[Becky Quick]

Good morning, everybody. Welcome to Squawkbox right here on cnbc. I'm Becky Quick, along with Joe Kernan, and this is Squawkbox.

[Joe Kernan]

You can use mine. It's over there.

[Becky Quick]

Let's see. I'm Becky Quick, along with Joe Kernan. Yeah, and Andrew's off today.

[Joe Kernan]

Are we allowed to show the whole set?

[Becky Quick]

Yeah, I think so.

[Joe Kernan]

No.

[Mohamed El-Erian]

Yes. Holy moly.

[Becky Quick]

Last week, things were so strong, in fact, that it actually moved both The S&P 500 and the Dow into positive territory, which was pretty impressive. We had, because for the month, it looked like they were gonna be down pretty significantly. The NASDAQ was still down by about 1 1/2 percent.

[Joe Kernan]

How'd you know that? Okay, listen, I just knew. Take a shot of me. Take a shot of me and you can read my teleprompter. Her teleprompter's down.

[Becky Quick]

Becky's in November.

[Joe Kernan]

So I'm gonna do reaction shots. And you read November.

[Becky Quick]

It was down. The Nasdaq was down by 1.5% in November. It broke a seven month winning streak. Both the Dow and The S&P 500 posted small monthly gains. It was their seventh straight positive month.

[Andy Richter]

Seven.

[Becky Quick]

Seven in a row. But again, they only pulled it off on Friday because as of Friday morning before trading started, both of those averages were down for the month as well. Thank you, Joe.

[Joe Kernan]

What do you think the better way to do it would be to pretend like nothing's wrong and no one knows anything like professionals or to bring people in to what we do and what our life is all about and to involve the viewer in issues like when you don't have a teleprompter. I mean, some people, if they don't have a teleprompter, they just stop. They have no idea. Right.

[Becky Quick]

Darren had that.

[Joe Kernan]

I stop when I have a teleprompter because I don't like it. But I'm going to read this now. Mine's fine. Mine is fine, but yours looks like a trigger. President Trump, as we said at the top of the.

[Becky Quick]

Well played.

[Joe Kernan]

Anyway, you know what I'm going to say. I'm finished. No, he says he's made his choice on the next Fed chair. Speaking with reporters on board Air Force One, the President said he knows who he's going to pick to succeed Jay Powell, Fed Chair.

[Mohamed El-Erian]

Are you any closer on that right now?

[Andy Richter]

I know who I'm going to pick.

[Katie Kramer]

Tell me.

[Becky Quick]

Kevin Hassett.

[Joe Kernan]

I'm not telling you. We'll be announcing it. Thank you very much.

[Becky Quick]

Is it Hassett that seems to be the front runner at this point? Hassett was gone over the weekend.

[Joe Kernan]

There's his picture. When asked if his selection was Kevin Hassett, the National Economic Council director, the President said he wouldn't tell reporters that have put Hassett in the lead to succeed. Some reports have Powell. Here's Hassett, though, on CBS's Face the Nation. That was yesterday.

[Becky Quick]

I'm really honored to be amongst a group of really great candidates.

[Andy Richter]

The thing that I was most impressed.

[Becky Quick]

About this week when that story leaked was that really I think the news for markets was Trump is close to announcing a new person who's going to replace Jay Powell.

[Joe Kernan]

And if you look at the market.

[Becky Quick]

Response to that, it was very, very positive. We had a great treasury auction. Interest rates went down. And so I think that the American people could expect President Trump to pick somebody who's going to help them, you know, have cheaper car loans and easier access to mortgages at lower rates.

[Joe Kernan]

And you're probably watching, unfortunately, I never, you know, Bessant was coming. I really wanted to be here.

[Becky Quick]

I knew you were really sick because I knew there was no way you could.

[Joe Kernan]

I never call on sick at, like, I don't get flu shots. I don't know. I probably should. But midnight Monday night, brutal. There's just no way. And I, I woke up Ann and, and everything.

[Becky Quick]

And because we had Besson on, I knew there was no.

[Joe Kernan]

He said he sh. Did he say hi, say hi to Joe? Something like that.

[Becky Quick]

He said he hopes you're feeling better.

[Mohamed El-Erian]

Okay.

[Joe Kernan]

I was scheduled off Wednesday and Friday.

[Becky Quick]

Yeah.

[Joe Kernan]

I'm not a, like a sick, like, wimpy person that doesn't get out of. I was scheduled off. Yeah. Make that clear to viewers. Treasury Secretary Scott Bessen, as I just said, told us last week he thinks there's a good chance that President Trump makes an announcement before Christmas.

[Becky Quick]

Yeah. When Hassett said. When that news leaked. It didn't leak.

[Joe Kernan]

I wish we knew. Yeah, he did. I wish we knew. The top three. Who's your top three? Warsh is still in, I think, Warren, I think the markets, honestly, I think the markets would almost do better on the initial, at first blush if it was.

[Becky Quick]

Well, I think the market would like to be guaranteed of another rate cut or two.

[Joe Kernan]

Well, how bad?

[Becky Quick]

I feel like it's being run out of. If it's no longer an independent Fed.

[Joe Kernan]

That's what I mean. Is the market that, you know, addicted to easy money at whatever the cost and it's going to rally on that, or is it going to rally on someone that might really reform the Fed and be tough when you need to be tough? I think the answer be tight when you.

[Becky Quick]

I think that originally, initially they wanted another rate cut or two, but I think they want somebody who is a strong, independent Fed leader.

[Joe Kernan]

Or do they want to.

[Becky Quick]

Because you don't want a situation where inflation, you know, rears back up again.

[Joe Kernan]

Or do you want someone who goes to 1%, like, boom, immediately? No, I don't think anybody wants that. So who's left? Is it Warsh Hessett Waller. Waller Bessant himself.

[Becky Quick]

Besant has said repeatedly he doesn't want to do that. So I would be shocked if it were actually Besant.

[Joe Kernan]

Yeah, I'd be shocked. Seems like it's going to be Hessett. Probably one of the Kevin Safe money is right now. The two Kevins. Kevin is the. I don't think we're allowed. Do you know that the name Karen is dropped off the top ten Shocker completely.

[Becky Quick]

No one's probably dropped off the top thousand.

[Joe Kernan]

No one is naming their daughters Karen anymore. But Kevin is the male Karen supposedly, right?

[Caroline Weaver]

Really?

[Joe Kernan]

Yeah, Kevin, Kevin. You know, But I don't even think we're allowed to talk about what a Karen is actually. But it is, right? So let's go. Probably not. Okay, nevermind.

[Becky Quick]

I just called the male versions Karen too.

[Andy Richter]

Yeah, so do I.

[Joe Kernan]

If you look at my Twitter account, I get in trouble. People don't like that. They get mad. Call people Karen.

[Becky Quick]

All right, Bargain hunters looking for deals this Cyber Monday, which is today, and lots of consumers actually turning to AI for help. Adobe analytics says that U.S. shoppers spent a record $11.8 billion online on Black Friday. That's up more than 9% from last year, according to Mastercard. Spending +E commerce sales were up by 10.4%. Mastercard said overall spending, including or excluding autos, I should say was up by 4.1% compared to last year. So still E Commerce growing at a faster pace than you see in traditional bricks and mortar.

[Joe Kernan]

European plane giant Airbus says that the vast majority of about 6,000 A320 jets affected by a safety alert have now been fixed. Airbus said an examination of an October incident. This was a JetBlue plane, experienced a sudden drop in altitude. It revealed that intense solar radiation could corrupt important data related to the flight controls on the A320. Thank you for fixing that. But airlines have been able to update their software faster than expected. Airbus says fewer than 100 planes still require work.

[Becky Quick]

You still look at that stock, it's about 7.8%. Because that's kind of shocking story. People sat up, paid attention to this. Americans said overnight that it. Right. Americans said overnight that it had repaired all of its plans.

[Joe Kernan]

It'd rather be a gain. A sudden gain in altitude would be better than.

[Becky Quick]

Well, not if there's a.

[Joe Kernan]

Well, neither one. Is something sudden. Yeah, anything sudden.

[Becky Quick]

Sudden and unexpected I guess would be. Sudden is one thing, but sudden and unexpected is different. But yeah, good news. But that stock's still under pressure today. In the meantime, the company that owns an Illinois data center that sparked a worldwide market problem on Friday says that it has beefed up temperature controls. Privately controlled Cyrus One told Bloomberg that it added additional redundancy to cooling systems at the facility, which is about 50 miles from Chicago. The massive amount of electronics in data centers can overheat if they're not properly cooled. And that was the issue on Friday. It led to one of the longest outages for exchange operator CME in years. Trading across stocks, bonds, futures, commodities and currencies was halted. And it wasn't just overnight. It was while we were on squawk box too. So continued right up to about 830 in the morning for some of those contracts. LCG showed that the outage lasted more than 11 hours. A Bloomberg report said that the CME's disaster recovery plan calls for a move to a data center in the New York area, but that the exchange opted against switching to a backup facility because it believed that the outage would be brief.

[Joe Kernan]

Is Rick Grieder still in the running?

[Becky Quick]

I always liked him as a name for that.

[Joe Kernan]

I like him but I mean blackrock. Would he have to. Would Larry tell him you got to think about climate change?

[Becky Quick]

Larry would tell him anything.

[Joe Kernan]

Why not?

[Becky Quick]

Rick Rieder would be his own man.

[Joe Kernan]

You have to think about climate change before you cut rates. It's going to get cold in December. I'm so confused. Ice age could have used some of.

[Becky Quick]

That cold in the data center on Friday. Open the doors.

[Joe Kernan]

Supposed to be very cold in December. But you know why it's going to be cold?

[Becky Quick]

Climate change.

[Joe Kernan]

Global warming.

[Becky Quick]

No, no. Climate change. That's climate change.

[Joe Kernan]

It's going to be cold because it's warm. Here's the breaking news. Nvidia announcing a partnership with Synopsys to revolutionize the design in engineering of called CUDA and other GPU accelerated computing and revolutionizing the design. Synopsys is a leader in engineering solutions from silicon to systems and it helps customers innovate AI powered products.

[Becky Quick]

CUDA's Nvidia's proprietary parallel computing platform and programming stuff. It's. That's a pretty big deal to hear innovations to Cuda coming and it's yeah.

[Joe Kernan]

An expanded strategic partnership. So it's not Nvidia invested let's see $2 billion at a purchase price of $414 a share into Synopsys. I don't know when that was. This expanded partnership will integrate the strengths engineering in addition. I think that's new. In addition Nvidia invested into Synopsys $2 billion. You can see how Synopsys is reacting to this expanded partnership. Pretty nice. Pretty nice move.

[Becky Quick]

And this is a little different than a lot of the other AI deals that we've talked about that seem circular. This is something where these are two real companies working together to strengthen things that they've already done together at this.

[Joe Kernan]

Point too, to be able to flesh all of the details out. Because they do talk about exactly what it's going to allow or what the goals are between the two companies. But it gets pretty arcane.

[Becky Quick]

Cheese will be next Coming up on.

[Katie Kramer]

Squawk Pod Shopping Local but Thinking Big Owner of the Locavore store in New York, Caroline Weaver only stocks locally made goods, but issues on a stage citywide and a global scale still affect her business.

[Caroline Weaver]

All of my things are local, but almost none of those things are made entirely of American parts. For example, a lot of it is packaging. So much of the packaging that my vendors use does not come from America.

[Andy Richter]

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[Joe Kernan]

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[Andy Richter]

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[Joe Kernan]

And wielded at business dinners like a samurai sword. It's a classic corporate power move, but.

[Andy Richter]

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[Joe Kernan]

End visibility on your most critical shipments.

[Andy Richter]

FedEx the new power Move this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[Katie Kramer]

This is Squawk Pod. Here's Becky Quick.

[Becky Quick]

The Locavore variety store here in New York City prides itself on stocking its shelves with Locally sourced goods. It's one of many small businesses that help force of the city's economy. Joining us right now is Caroline Weaver. She's the founder of the locavore guide, that's a director to the city's independent businesses. She's also the owner of the locavore variety store. And Caroline, thank you for coming in today. Welcome.

[Caroline Weaver]

Thank you for having me.

[Becky Quick]

Let's talk about what locavore means. First of all, that's local carnivore. Basically, you're only consuming things that are made within 100 miles from where you are.

[Caroline Weaver]

That's right. It's a term used to describe people who consume locally.

[Becky Quick]

And what are you finding just in terms of this being a trend of more people looking for something like this?

[Caroline Weaver]

I think currently people are a lot more conscious of where the goods that they buy on an everyday basis come from. And so my shop stands to demonstrate that local doesn't just mean cottage industry goods, it means actually manufactured things.

[Becky Quick]

What type of things do you sell?

[Caroline Weaver]

Oh, we sell everything from hand blown glass to toothpicks, paste and wiffle ball. We sell nail clippers, we sell screwdrivers. It's truly almost everything.

[Becky Quick]

And where do you find these things? Where'd you come up with the idea to begin with?

[Caroline Weaver]

I have only ever been a shopkeeper. I used to own a stationery shop. And as a new Yorker, we have so many wonderful things that are made in our own backyards that people just don't know about. And I grew tired of ordering things online to be shipped to my apartment from brooklyn. And I thought, how wonderful would it be to have a place where you could find all of these things in one store?

[Becky Quick]

I would guess that maybe the tariffs are helping with that too. Maybe things that are made locally used to be more expensive than things made overseas and shipped here. But now with the tariffs, maybe that offsets some of that differential a little bit.

[Caroline Weaver]

And I think that the consumer perspective is changing a little bit. People are seeking out locally made goods because they're aware of the tariff situation. But even for me, all of my things are local, but almost none of those things are made entirely of American parts. And so for a lot, for, for example, a lot of it is packaging. So much of the packaging that my vendors use does not come from America.

[Becky Quick]

So what have you found with your vendors? Are they able? It's not just packaging, I would assume it's a lot of the other things that go into their goods too that they have to buy from overseas.

[Caroline Weaver]

Yeah. And a Lot of them are very smart, and they stockpiled when they had the chance. And so I don't think we're seeing the full effects of the. Those price increases quite yet. They were all preparing for a Christmas season, for relatively normal Christmas season. And so I don't know that we've seen the effects of that quite yet. My prices, if they have increased, have increased about 10 to 15%. But I'm not as immune to it as people assume I am.

[Becky Quick]

How. How have. I mean, just to begin with, made locally, I would assume it costs more money than buying something from overseas. Traditionally.

[Caroline Weaver]

It very often does. The cost of shipping things overseas, even without tariffs, sometimes makes it easier to manufacture locally. But I think there are a lot of misconceptions that local necessarily means more expensive. A lot of the brands that I sell, or all of them actually, are independently owned. They are also small businesses, and they're not padding their margins the same way that big businesses do because they don't have shareholders to pay. They don't have enormous marketing expenses. So it's just priced differently.

[Becky Quick]

What? Go ahead.

[Joe Kernan]

Did you watch the election closely?

[Caroline Weaver]

I did, yeah. And the election here in New York City?

[Joe Kernan]

Yes.

[Caroline Weaver]

And do you want to know who I voted for?

[Joe Kernan]

No. You don't need to tell me that. But things could change a little. You know, I'm torn. We had eight years at de Blasio and nothing really happened. I don't know about Eric Adams, but I would not want to be. I wouldn't be as bullish as being a local sorcerer in New York City with a communist or socialist.

[Caroline Weaver]

Oh, I feel like differently. I think affordability and safety in New York City has so much to do with what is in our storefronts.

[Joe Kernan]

But the solutions to those two issues are solutions that have never worked in the history of the world.

[Caroline Weaver]

Well, clearly, whatever is happening right now also isn't working. So as a small business owner, I'm open to something new.

[Joe Kernan]

Well, capitalism isn't working. You think socialism might be something to try out?

[Caroline Weaver]

I think something has to change, and it's a really, really challenging climate for independent retail and for small business owners right now. And I think a lot of us are fed up with the way that things have been working, and we are open to something new.

[Becky Quick]

What are the biggest problems that you face as a small business owner?

[Caroline Weaver]

We kind of are marginalized because we exist on the fringes of a lot of these capitalist systems. And with the. With the tariff thing, a lot of what's happening for small businesses is that they're not able to get the goods that they need because manufacturers who are already stretched when it comes to the supply chain are prioritizing larger manufacturers. And so for small business, especially at Christmas time, during a time of economic volatility, if we can't get the inventory that we need to sell to pay our rent, to pay our employees a living wage, to pay our health insurance expenses, we can't exist.

[Becky Quick]

How was small business Saturday at your store or some of the others that you see around?

[Caroline Weaver]

In my store, it was, it was great. We had a really busy weekend. I think small business Saturday should be either the weekend before or the weekend after because a lot of people aren't in town. But what we're seeing and what a lot of my other colleagues are seeing is that people are starting to shop. Earlier this year, we saw it start a full month earlier than what we're used to because I think consumers are a little bit anxious about supply, they're a little bit anxious about, about pricing, and they're trying to be strategic about their shopping.

[Becky Quick]

Caroline, thank you.

[Caroline Weaver]

We appreciate having me.

[Katie Kramer]

Up next on Squawk Pod, Wharton professor Mohamed El Aryan addresses market and political failures of 2025 as well as the health of the economy this holiday season.

[Mohamed El-Erian]

The consumer somehow keeps on going, but there's concern, there's concern about the labor market decoupling from gdp. Remember, this is just a demand transition to the productivity impact of AI.

[Katie Kramer]

We'll be right back.

[Andy Richter]

Hi there, it's Andy Richter and I'm here to tell you about my podcast, the Three Questions with Andy Richter. Each week I invite friends, comedians, actors and musicians to discuss these three where do you come from, where are you going, and what have you learned? New episodes are out every Tuesday with guests like Julie Bowe and Ted Danson, Tig Notaro, Will Arnett, Phoebe Bridgers, and more. You can also tune in for my weekly Andy Richter call in show episodes where me and a special guest invite callers to weigh in on topics like dating, disasters, bad teachers, and lots more. Listen to the three Questions with Andy Richter wherever you get your podcasts. The holidays mean more travel, more shopping, more time online and more personal info and more places that could expose you more to identity theft. But LifeLock monitors millions of data points per second. If your identity is stolen, our US Based restoration specialists will fix it, guaranteed your money back. Don't face drained accounts, fraudulent loans or financial losses alone. Get more holiday fun and less holiday worry with Lifelock. Save up to 40% your first year. Visit lifelock.com Specialoffer terms apply. Buy the tip with Pro's Best Deal of the year, including exclusive access to Pro live events.

[Mohamed El-Erian]

This is my first time at the stock exchange and it's been awesome.

[Andy Richter]

Go [e-mail] ProBlackFriday terms and restrictions apply.

[Katie Kramer]

Welcome back to Squawk Pod from CNBC Today with Joe Kernan and Becky Quick.

[Mohamed El-Erian]

Stand by, Joe. His mic. Q.

[Joe Kernan]

You are watching Squawk Box on cnbc. I'm Joe Kernan along with Becky Quick. Andrew's off the day.

[Becky Quick]

Joining us right now is Mohamed El Hairian from the University of Pennsylvania's Wharton School of Business Business. He's also chief economic adviser at Allianz. And Mohamed, welcome. There have been some interesting trends in the market lately. What have you made of all these trends that looked so concerning two weeks ago and then looked pretty good last week?

[Mohamed El-Erian]

I actually have been encouraged because I think that trade has become more differentiated. People have understood that vertical integration matters. They have understood that multiple sources of revenues matter. So we starting to see AI being much more fundamentally driven than hype driven.

[Becky Quick]

Explain that. I don't, I don't get that. Because it seems like every time there's a deal, both companies tend to go up. Whatever two deals, whatever two companies are there, how are we differentiating between what works and what doesn't?

[Mohamed El-Erian]

So let's start with Gemini. I think Gemini 3 was a significant change in the landscape. I think it made people realize that if you are going to be a winner in this arms race, because it is an arms race, you have to have certain attributes that not all the companies have. So you started seeing Google outperform other companies. Now you're starting to see much more consideration of how you funding yourself. Are you funding yourself mainly from revenue or are you funding yourself from circular financing? That's all good because you didn't want the bubble phase to get carried away too much because otherwise there would have been a lot more damage than there would be otherwise.

[Becky Quick]

The idea of data centers being pretty fully booked at this point, I had heard one person describing this as saying we're not in the same situation. We were back with Lucent or Cisco or some of those companies back in the early days of the last big tech bubble because these data centers are still fully booked. So you're not building out empty demand at this point.

[Mohamed El-Erian]

Correct. And there's a perception there may be even a waiting list, if you like, for use of these data centers. I think it's so good that we having them now because if we didn't have that. On the demand side if we didn't have a related activities drive gdp, we'd be talking about store speed because the rest of the economy is having a harder time. So we have this transition.

[Becky Quick]

Those resources have been all devoted to AI and, and they would be resources that could be deployed somewhere else if it weren't for that.

[Mohamed El-Erian]

No, I think it's because AI has, has proven to be such a powerful driver and on the other side we're dealing with legacy. We've talked a lot about affordability. The consumer somehow keeps on going but there's concern, there's concern about the labor market decoupling from gdp. So there's concern about the labor market on there but if it weren't for AI related we would be talking about store speed. So it's a really good thing. And remember this is just a demand transition to the productivity impact of AI.

[Becky Quick]

You think about some of the stocks though that have been front and center for this. Those companies like a Microsoft. So many of these companies that for a very long time Oracle and others that were able to bring in a lot of profitability because they did not have a lot of capex that they were spending. You know, these were very asset like companies. That's not the case with this. Do you think the profitability will follow the money that's being spent here?

[Mohamed El-Erian]

I do, but a lot will depend on adoption. So what do we always talk about? We're fascinated by those who are working on AI, the builders, the exciting new foundational models. What we don't talk enough Becky, about those working with AI and that's going to be critical because adoption is going to be important. If you step back, we do need an adoption policy. We don't have that right now and that's why we risk falling behind China.

[Becky Quick]

Accenture I think is number three on the S&P 500 list of gainers this morning it's up pretty sharply after announcing a deal with OpenAI that it's going to be using its chat with its clients with kind of putting that out there so that they can get using them and seeing that as an enterprise book. Yeah, it's up by about 2.8% right now. That's all fine and well but when does the disintermediation show up in terms of as Joe pointed out, do you need a consultant to put you in touch with ChatGPT or are these just going to be tools? Tools that make them more efficient at their work?

[Mohamed El-Erian]

You will need. I mean, I mean Accenture is a Perfect example of a company that has understood. So it talks about we reinvent us, it's reinventing itself. It talks about having to upscale its, its own labor force so that it could help others. And I think Julie Sweet, the CEO, is leading in a very visionary manner. If you talk to others, you find a wide dispersion. There are those who are ready to adopt. There are those who say our databases don't speak to each other. We can't even go anywhere near that. So you're going to need help with a lot of the distribution when it comes to adoption. And I think Accenture has taken the lead on this, but it has understood that the first step is to reinvent yourself. And that's exactly what they've done.

[Becky Quick]

So what are you watching outside of this trade? Obviously that's leading the market has been for a while, but there's a lot of other things that are happening. Federal Reserve and beyond.

[Mohamed El-Erian]

We are captivated right now, understandably, by two things. Will they cut this month or not? And who will be the next Fed chair? As important is how will this Fed be reformed? This Fed went to sleep. Yes, we made mistakes. Yes. We have to talk about our forecasting. We have to think about scenario analysis, not point estimates. We have got to be better at the supply side. And most importantly, the compliance culture has to improve. So there's a lot of things that we have to focus on on the Fed because it's so central to our economic well being.

[Becky Quick]

And that will play out over what, the next year or you think this is a much longer term.

[Mohamed El-Erian]

So I think what, what the Secretary said on your show last week was perfect, is we don't need a play by play Fed. We need the Fed to cool it. We need the Fed to step back and take a bigger sort of visionary view. And we need reforms. We desperately need reforms. And I think all five on the short list economist are committed to reforming that institution, which is critical not just for the US but for the global economy.

[Becky Quick]

Is there a point where the market gets uncomfortable with reform or the market you think is clamoring for it at this point?

[Mohamed El-Erian]

I think the market right now is focused honestly on will they cut in December and who is going to be the Fed chair. There will come a time when the Fed when they'll go from tactical to strategic and these things would matter. It is almost absurd. Then the last month the probability of a December cut has gone from 90%.

[Becky Quick]

To 30%, back up to 86 or 87.

[Mohamed El-Erian]

90.

[Becky Quick]

Is it 90 morning?

[Mohamed El-Erian]

Yeah, it's crazy. I mean, this should not happen. The whole point of forward guidance is predictability and stability. So there is something wrong that has to be addressed. The rest of the world looks at this and say, wait a minute, the Fed is at the core of the system and there's so much volatility in what they expect they're going to do in a few weeks. What's going on here?

[Joe Kernan]

How do we get away? Just. I'm still thinking about this last interview. If 51% of people under 30 think socialism is, is a preferable alternative to capitalism, how does that work itself out as time goes by? Does it? You saw what happened in New York and obviously there's, there's issues that we're well aware of. It's just the solutions that we know lead have some serious adverse consequences, at least historically from what we've seen if we head down that road.

[Mohamed El-Erian]

So one of the things I've been doing, although I wasn't allowed to do it on Thursday at Thanksgiving, is ask people who did you vote for and why? And what you hear from the young people over and over again is what you heard in a previous interview is somehow the system doesn't work. So if you ask the question why does the system doesn't work? Is because we didn't pay enough attention to not just what is necessary, which is market based capitalism, but what's necessary and sufficient, which is also to recognize that there are market failures, there are.

[Joe Kernan]

Institutional failures that usually tied to government intervention.

[Mohamed El-Erian]

There are institutional failures, that's government failures. But there are also market failures. There's also market failures.

[Joe Kernan]

If there weren't failures, there can't be any winners, right?

[Mohamed El-Erian]

I think there can be winners. What happens to the failures is that if you don't address the failures, the people who are left out come back and undermine the whole system. The UK is a perfect example. It makes no sense for the UK to exit the European Union, your biggest trading partner. And yet all you needed to say to people is regain control. This notion of somehow you've been left behind and you can regain control. So Joe, it is about addressing what.

[Joe Kernan]

Kind of market failures are you talking about.

[Mohamed El-Erian]

So we have monopoly power that has to be addressed and that is something the administration is focused on. We've got to also look at how to make sure that the productivity promise that's ahead of us is something that is offered by many. So there's infrastructure issues.

[Joe Kernan]

So, so your contention is that the market failure of capitalism is that we aren't addressing monopoly issues.

[Mohamed El-Erian]

Effect. My prediction is that unless you address institutional failure, which include government failure and market failures.

[Joe Kernan]

What type of market failures are you talking about? What are you referring to?

[Mohamed El-Erian]

Where competition is not fair. That simple. Where you and I, that happens a lot, you think? I think it happens quite a bit.

[Joe Kernan]

I mean, look at, look at the way our economy has performed versus the rest of the world. You don't see a vibrant, strong.

[Mohamed El-Erian]

The rest of the world is a mess. I mean, if you look to Europe, okay, you promise Europe an 80, 28 is going to be good, 20 is going to be bad. Here, people focus on the 80 and want to unleash the 80 there. All they care about is the 20 and they regulate away the 80. So I don't want comparing us with the rest of the world is really, it's like comparing the jets.

[Joe Kernan]

But you look at technology, you look at AI, you look at any of the things that you look at, even health care, any of the things it's expensive, but it's innovation and everything else.

[Becky Quick]

But it comes back into and that becomes the if they feel like the system's failing them, when they can't buy a house, when they can't buy a.

[Joe Kernan]

Car, when they can't be the 21 and a half percent total inflation from the Biden administration's four years is why we have an affordability.

[Mohamed El-Erian]

Correct. And the key to affordability is going to be income. Remember, affordability is the price level. And people somehow think the price level is going to come down. It's not. It's going to come down. Wages got to go up and then it's income. Income's got to go up. And I think that, that, that is.

[Joe Kernan]

It is again, at least. And real wages are going up again at this point.

[Becky Quick]

Mohamed, thank you.

[Mohamed El-Erian]

Thanks for having me.

[Katie Kramer]

And that's the pod for today. Thanks for starting your week and your month with us. Happy December. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Follow Squawkpod wherever you get your podcasts. Have a great Monday. We'll meet you right back here tomorrow.

[Mohamed El-Erian]

We are clear.

[Andy Richter]

Thanks, guys. Hi there, it's Andy Richter and I'm here to tell you about my podcast, the Three Questions with Andy Richter. Each week I invite friends, comedians, actors and musicians to discuss these three where do you come from, where are you going, and what have you learned? New episodes are out every Tuesday with guests like Julie Bowen. Ted Danson, Tig Notaro, Will Arnett, Phoebe Bridgers, and more. You can also tune in for my weekly Andy Richter Call in show episodes, where me and a special guest invite callers to weigh in on topics like dating, disasters, bad teachers, and lots more. Listen to the three Questions with Andy Richter wherever you get your podcasts.