Summary4 min read

Bloomberg Talks: Diane Swonk Talks Economic Data

Date: February 11, 2026
Guest: Diane Swonk, Chief Economist, KPMG
Host: Bloomberg Team

Episode Overview

This episode features Diane Swonk, Chief Economist at KPMG, discussing the current state of the US economy by analyzing recent labor market data, wage dynamics, and the shifting landscape between profits and wages. The conversation explores the nuances of economic recovery, inequality, and how structural changes are shaping employment, consumer behavior, and Federal Reserve policy.

Key Discussion Points & Insights

1. Wages, Corporate Profits, and Economic Frustration

Timestamps: 00:07–01:36

Record-breaking gap: Diane highlights a long-term record in the divergence between corporate profit share and wage share in the US economy—“as much as we've been since the data started ... going back to the 1970s.”
Productivity gains benefit capital: “You're seeing the productivity gains accrue to the owners of capital as opposed to workers and that's why workers are not very happy about where things are.” (Swonk, 00:30)
Labor market recovery: The labor market is “healing after getting cratered last year,” though at a measured pace.
Inflation’s compounding effect: Swonk draws an analogy between compounding inflation and compounded stock market returns: “much like stock returns compound, also inflation compounded over the last five years, leaving too many prices out of reach for too many.” (Swonk, 01:24)

2. Federal Reserve & Labor Market Strength

Timestamps: 01:42–02:52

Unemployment shows improvement: Host highlights fresh data: unemployment rate falls from 4.4% to 4.3%. The U-6 underemployment rate drops from 8.4% to 8%.
Significance for underemployed: “That's an important move... for those who are really struggling to get a job. What we're starting to see is some of the ice melt in the labor market now and things beginning to shift a bit.” (Swonk, 02:15)
Fed likely to remain cautious: “On the flip side of it, it keeps the Fed on the sidelines longer.” (Swonk, 02:49)

3. Immigration, Labor Sectors, and Spending Shifts

Timestamps: 02:52–04:01

Sectoral shifts in employment: Swonk notes “a major shift in things like leisure and hospitality. In terms of quit rates. Quit rates in that sector have soared even as they've cooled and sort of come to a near standstill across the economy.” (Swonk, 03:11)
Weak wage growth and spending: Despite high quit rates, wage pressures remain low; vacation spending slipped overall except for affluent households, “luxury hotels continue to do extremely well. But the rest of the economy side of vacations did not.” (Swonk, 03:35)
Rising inequality in consumer experience: Only wealthier Americans are maintaining higher spending, emblematic of a deepening economic divide.

4. Regional Disparities & The "K-shaped" Economy

Timestamps: 04:01–05:40

Gloom vs. vibrancy: Host asks about reconciling negative snapshots (e.g., 6% unemployment in Alexander County, Illinois) with overall economic vitality.
Fewer winners, deeper divides: Swonk responds, “fewer firms and fewer households are accounting for more of the economic gains.”
“K-shaped” recovery: “There really is this delineating thread that goes through the US economy in terms of wealth versus non wealth... it's not just housing market wealth. Equity in your home cannot be as easily tapped. But wealth in the stock market has moved up dramatically... it's not filtering down to workers.” (Swonk, 05:00–05:19)
Structural vs. cyclical job loss: If job losses are structural, “then rate cuts don't help them. If they are more demand driven and the rate cuts actually help to re-ignite employment—that's great. Although they don't usually work quite this quickly.” (Swonk, 05:28)
Uncertainty endures: Measures of economic uncertainty “moved back up again in the month of January.” (Swonk, 06:10)

Notable Quotes

On capital vs labor:
“You're seeing the productivity gains accrue to the owners of capital as opposed to workers and that's why workers are not very happy about where things are.” — Diane Swonk (00:30)
On compounding effects:
“Much like stock returns compound, also inflation compounded over the last five years, leaving too many prices out of reach for too many.” — Diane Swonk (01:24)
On the labor market’s outlook:
“What we're starting to see is some of the ice melt in the labor market now and things beginning to shift a bit. We need to keep up that momentum for workers. On the flip side of it, it keeps the Fed on the sidelines longer.” — Diane Swonk (02:17)
On the K-shaped economy:
“There really is this delineating thread that goes through the US economy in terms of wealth versus non wealth.” — Diane Swonk (05:04)
On structural challenges:
“If these losses that we saw in jobs last year were more structural than cyclical in nature, then rate cuts don't help them.” — Diane Swonk (05:24)

Memorable Moments & Tone

The episode maintains a frank, data-driven tone, with Diane Swonk providing clear-eyed analysis and drawing distinctions between structural and cyclical shifts.
Hosts add color by referencing real-life examples (e.g., Alexander County, Illinois) and market headlines (Fed rate cut expectations), grounding the macro discussion in lived realities.

Key Timestamps

00:07–01:36: Profits vs. wages, labor market, inflation compounding
01:42–02:52: Unemployment rate, U-6 detail, Fed implications
02:52–04:01: Sector-specific labor shifts, inequality in spending
04:01–05:40: K-shaped economy, regional disparities, structural versus cyclical change

Summary

Diane Swonk offers a nuanced snapshot of the US economy, emphasizing widening gaps between capital owners and workers, persistent inequality, and the uncertainties that complicate the Federal Reserve’s outlook. She warns that while headline data show some healing, underlying divides mean that policy and recovery effects are uneven and, in some aspects, potentially resistant to rate cuts alone. The conversation equips listeners to see beyond general statistics and appreciate the structural forces shaping today’s economic landscape.

Loading summary

Transcript11 lines

[00:03]
A
Bloomberg Audio Studios Podcasts radio news.
[00:08]
B
Your leadership at the national association for Business Economics is noted with KPMG. Diane Swonk joins us right now. Diane, just a 60,000 foot question for our listeners. Those with a job, those with Google stock options in the Google hundred year piece and those flat on their back across America. And how shaped are we this morning?
[00:30]
A
Well, we are as much as we've been since the data started on corporate profit share versus wage share in the economy going back to the 1970s. What we're seeing is a record break between the share of profits going to the two wealth holders versus the amount of going to wages. And I think that's where the bulk of this is. You're seeing the productivity gains accrue to the owners of capital as opposed to workers and that's why workers are not very happy about where things are. Also, when you think about wages, I think it's very important to understand that we are seeing this labor market looks like it's now healing after getting cratered last year. That's important, but it's healing at a pace, as Claudia and Eric pointed out, where we just don't need to generate many jobs, be able to bring the unemployment rate down which could push wages higher. That's great if it does not also be accompanied by inflation. And we know that much like stock returns come pound also inflation compounded over the last five years, leaving too many prices out of reach for too many.
[01:37]
B
Paul, I was just going to say for your weekend reading. Sure. It's that Friday. It's Wednesday now.
[01:42]
C
I know we got a ways to go. Tom, A red headline crossing the Bloomberg Terminal traders fully price in Fed rate cut by July versus June previously. So the work function kind of we're seeing it right there here on this strong labor print. Diane, we know the Fed likes to look at this unemployment rate and boy, it ticked down from 4.4% to 4.3%. That's full, full fully employed America, isn't it?
[02:09]
A
Actually it is. It's even better under the hood. What we saw was the U6 rate, which is that sort of underemployment rate where you get discouraged workers and those having just cut part time for economic reasons that fell to 8% from 8.4% in December. That's an important move. It's still well above the 6.2% we saw back in 2019, but it is and an important move down for those who are really struggling to get a job. What we're starting to see is some of the ice melt in the labor market now and things beginning to shift a bit. We need to keep up that momentum for workers. On the flip side of it, it keeps the Fed on the sidelines longer.
[02:52]
C
We're not seeing, you know, what this economy, this labor economy has been described as a, you know, kind of a low hire, low fire type of environment. How about some of the industries that rely historically upon immigration, such as housing, agriculture? Are we seeing any problems there?
[03:10]
A
Well, we are seeing a major shift in things like leisure and hospitality. In terms of quit rates. Quit rates in that sector have soared even as they've cooled and sort of come to a near standstill across the economy. And the job openings and labor turnover survey, we saw those quit rates really soar. That has not been accompanied by a lot of wage pressures in the economy. That was very weak last year. And in fact, vacations actually went down a bit over the course of the year. We saw only the affluent households continuing to spend heavily on vacations. And that showed up in the breakdown in terms of people paying to go to the front of the bus, in terms of the planes and luxury hotels continue to do extremely well. But the rest of the economy side of vacations did not. In 2025, I bringing you here, folks.
[04:01]
B
I believe is Dr. Swonk. That's, that's Kevin Warshaw saying today and we need to talk right now, Diane, one of the things here, and you know, I'll pick on, you know, a city that I know is really having Trouble. Alexander County, Illinois, 6% unemployment rate. This is Cairo. It's, you know, southern, Southern Illinois has really struggled. How do you synthesize, Diane, with all your decades of work, the easy gloom path versus observing the vibrancy of the American economy. I mean, the media and Tom Keene are really, really good at going out and finding a 6% unemployment rate and saying, OMG, the world's going to end. But there's an America that's vital out there. How do you balance that after this report?
[04:53]
A
Well, I think the important issue is that we know that fewer firms and fewer households are accounting for more of the economic gains in the US Economy. And that's where you get to the K shaped economy. We've talked about it a lot, but it's showing up in just about everywhere, in every strata, even with higher income households now trading down and going to big box discounters trying to get more value because they're feeling small strained as well, unless they have a large stock portfolio. So there really is this delineating thread that goes through the US economy in terms of wealth versus non wealth. And it's not just housing market wealth. Equity in your home cannot be as easily tapped. But wealth in the stock market has moved up dramatically and that is important because it's not filtering down to workers and the dichotomy of those two things happening at the same time. The hard part is that it keeps inflation buoyed as well. And I think that's something that the Fed is going to be watching for. And we know that as we, as you heard earlier, I think Eric pointed it out. If these losses that we saw in jobs last year were more structural than cyclical in nature, then rate cuts don't help them. If they are more demand driven and the rate cuts actually help to re reignite employment, that's great. Although they don't usually work quite this quickly. So I have my doubts about that. I think we are working through some big uncertainty issues that finally abated a bit. But measures of uncertainty move back up again in the month of January.
[06:25]
B
Dan Swonk, thank you for your work. Diane Swonk is on KPMG here.