Underlying jobs market is still very weak despite strong report, says KPMG's Diane Swonk

Summary

Diane Swonk of KPMG argues the jobs report headline overstates labor market strength, noting weakness in household survey and rising underemployment. She sees inflation becoming stickier due to multiple shocks (oil, supply chain) and fiscal stimulus, and believes the Fed has been too dovish. Steve Liesman shows services inflation remains elevated. Both guests emphasize the Fed faces a difficult policy path ahead.

• Diane Swonk highlights weakness in household survey and rising U6 underemployment.
• She argues rate cuts cannot fix labor market issues.
• Inflation is becoming stickier due to multiple shocks and fiscal stimulus.
• Swonk believes the Fed has been too dovish on inflation.
• Super-core services inflation was accelerating before the Iran shock.
• Steve Liesman presents a chart showing services inflation above pre-pandemic levels.
• Fed's Goolsbee expressed worry about inflation even excluding energy.
• The Fed's resolve to fight inflation will be tested by markets.