KPMG chief economist Diane Swonk said the underlying jobs market remains very weak despite a strong recent jobs report [1].
This assessment challenges the surface-level optimism of employment data. If the core labor market is fragile, the Federal Reserve may face more difficulty balancing inflation control with the need to prevent a spike in unemployment.
Speaking on CNBC's "The Exchange," Swonk said the current state of the economy and the role of the Federal Reserve in managing labor market data [1]. While some reports indicate a strong headline number, Swonk said that the fundamental health of the employment landscape is not reflecting that strength [1].
This disconnect is evident in specific sectors of the workforce. For example, the unemployment rate for recent college graduates reached 9.7% as of September 2025 [2]. This figure highlights a struggle for new entrants to the workforce, a critical indicator of long-term economic health.
Other reports suggest a different trend, noting that some new graduates are finding employment faster than before [2]. However, Swonk's perspective emphasizes that these fragmented improvements do not necessarily signal a broad recovery of the underlying market [1].
The conversation with CNBC host Steve Liesman focused on how these contradictions shape the broader economic outlook [1]. The gap between headline growth and the reality for specific worker demographics suggests that the recovery may be uneven across the U.S. economy [1].
“the underlying jobs market is still very weak despite a strong report”
The tension between strong headline jobs reports and the high unemployment rate for recent graduates suggests a structural mismatch in the U.S. labor market. If the 'underlying' market is weak, it implies that job growth may be concentrated in specific industries or among existing workers, while new entrants struggle. This could lead to a slower long-term economic recovery if the workforce cannot effectively integrate new talent.
