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.