Job gains came to virtual standstill after first four months of 2025: KPMG's Swonk

Summary

CNBC's The Exchange discusses a weaker-than-expected December jobs report and the outlook for Federal Reserve policy with KPMG chief economist Diane Swonk and Wells Fargo CIO Darrell Cronk. Swonk argues the labor market's post-May stall is largely structural, so Fed rate cuts alone cannot cure it, and she expects the first cut in June. She also highlights robust but bifurcated consumer spending and strong productivity as reasons the Fed can remain patient.

• December jobs report was weaker than expected, capping a year of slowing hiring.
• Job gains have essentially stalled since May, with 84% of 2025 gains occurring in the first four months.
• Swonk says labor-market weakness is more structural than cyclical, tied to immigration curbs, uncertainty, and post-pandemic right-sizing.
• She expects the Fed to pause and deliver its first rate cut in June, warning cuts cannot cure structural labor weakness.
• Strong productivity growth and robust GDP are arguments for keeping rates higher, not for imminent easing.
• Consumer spending is strong but concentrated: top 20% households account for a record 57% of spending.
• Lower-income households are struggling, and Swonk sees risk that premature cuts could stoke persistent inflation.
• Darrell Cronk is introduced but does not speak in the provided transcript.