Diane Swonk

Chief Economist, @KPMG_US. Briefs Federal Reserve. Labor economist with more years experience than I care to admit. Opinions my own. RTs not endorsements.

[Diane Swonk @DianeSwonk]

@herbad_habit Yep. It is cooler than CPI but still to hot.

[Diane Swonk @DianeSwonk]

🔥PPI data components to Fed’s favored inflation gage, with the CPI poised to raise PCE index 0.3%, core 0.3% & super core servicesby our est ab 0.3%. Cooler than CPI but still too hot.

The relief in oil prices will help in November; refining capacity still a problem along with the demand & price increases due AI demand & chokepoints in supply chains. The underlying inflation figures will remain a problem even with welcome relief at the gas pump.

Demand destruction abroad has helped to lower futures prices, narrowed gap between futures & spot.

Much still turns on whether tensions with Iran abate of intensify and need to replenish inventories depleted, which will create a temporary floor under oil prices.

The wild card for the Fed is persistence of service sector inflation and concerns that psychology of inflation is shifting.

Still on track for a December rate hike. Hopeful on lower gas prices - but we tax holidays expire soon and who knows the path in the Middle East, which still matter.

[Diane Swonk @DianeSwonk]

“Overall, three of our four measures show increasing trends in vulnerabilities of the overall banking system. While uniformly lower than the high levels seen in the run-up to the 2008–09 financial crisis, some of the measures have been higher in recent years than the low levels attained between 2015 and 2020.”

[New York Fed @NewYorkFed]

In today's post, the authors provide an update on the vulnerability of the U.S. banking system using four analytical models. They update their analysis with data through Q2 2026 and discuss how the vulnerability measures have changed since the last update one year ago. https://t.co/al0leUC2mY

[Diane Swonk @DianeSwonk]

“The takeaway for executives, investors, and policymakers is clear: the U.S. banking system is not flashing 2008-style red alerts, but its margin for error is shrinking.”

From new research by @NYFedResearch

[MRodriguezValladares, MRV Associates @MRVAssociates]

@NewYorkFed I included your research in my article. https://t.co/s9wITfGK2W

[Diane Swonk @DianeSwonk]

Interesting work on entry level problems for new college grads. ⬇️

[Ernie Tedeschi @ernietedeschi]

New from @Stripe Economics: employment of young college grads is weaker than normal. Much of the debate is around AI's impact. But evidence is growing that work-from-home is a major factor, which we find in public data & our own Stripe data. 🧵 https://t.co/uTSZMX2TAe /1

[Ernie Tedeschi @ernietedeschi]

Bottom line: WFH looks like a meaningful factor in young grads' weaker recent job prospects, even as it helps disabled & older workers. To be clear, this doesn't rule out AI entirely: the 2 are hard to disentangle & AI's effects may emerge over time. /🔚 https://t.co/uTSZMX2TAe

[Diane Swonk @DianeSwonk]

My long life was punctuated with many inter-meeting moves. I hope they are not necessary, but meeting schedules don’t mean as much in a crisis. The meeting cadence slows official communications by the Chair - not by any other Fed leaders. That genie is tough to put back in a bottle.

[Diane Swonk @DianeSwonk]

@McBain002 My colleague wrote about it yesterday and I flagged the 20% who do were already late on debt payments - last year - which has gotten worse.

[Dante Roccasecca @drocktax]

The economy is growing, but the gains are far from equal. Worth a read: @DianeSwonk’s latest Economic Compass on inflation, wealth and the Fed: https://t.co/w3rq2JFsMR

[Karen Nye @KNyeEcon]

In case you missed it, @KPMG_US chief economist @DianeSwonk told @BloombergTV’s @VonnieQuinn that the PCE inflation report will come in hotter than expected.

https://t.co/Je9cUL9sNV

[Diane Swonk @DianeSwonk]

My new monthly⬇️
Base & a Bear Market scenario. Can’t rule out a worst of all worlds, stagflation but odds still low. Fed has hard choices ahead.

[Vince Vickers @vincevickers]

The economy is growing, but the gains are far from equal. Worth a read: @DianeSwonk’s latest Economic Compass on inflation, wealth and the Fed: https://t.co/x8wpFO94T8

[Karen Nye @KNyeEcon]

Watch @BloombergTV at 330pm Eastern to hear @KPMG_US chief economist @DianeSwonk discuss the hotter than expected inflation report with @VonnieQuinn and Jess Menton.

[Diane Swonk @DianeSwonk]

@MoultonWealth I corrected it

[Diane Swonk @DianeSwonk]

🔥CPI was hot with way too many things rising in price, especially for those who must focus on necessities.

The three-month annualized pace soared to 4.4% its hottest since June. We lost CPI last year in October due to 6-week government shutdown. Our interpolation of the data shows CPI rising 4.1% from a year ago, well above the avg hourly earnings. That is why wage earners feel the blow to their purchasing power.

Food, electricity, and fuel oil all up. Baby formula largest surge on record, a blow to costs of having children. Beef and snacks up. Cattle stocks slim & shipping costs up up up.

The core CPI, jumped 0.3% for 3rd month in row, 0.1% above pace needed to achieve price stability, let alone cool inflation.

The supper core services, which understates the PCE index, surged at a 5.5% three-month annualized pace, up from 4.6% in September.

The components that feed into the @federalreserve preferred gauge, the PCE index, will be HOTTER🔥

Gov. Chris Waller, who spoke in London & likely had this report on hand, warned of a half percent hike in December. Hawks have had it & fear the Fed is losing it inflation fighting credibility.

We are enduring the worst bout of inflation relative to wage gains since the 1970s. The Fed is mulling moving with conviction instead of caution, a major shift.

Inflation is a regressive tax & it was still getting much worse in October.

[Diane Swonk @DianeSwonk]

I took my inspiration for this month’s outlook from Charles Dickens and A
Tale in Two Cities to explain the paradox of the AI boom and wealth vs want. Two scenarios, two very different outcomes.
https://t.co/R2t3axXNOs

[Diane Swonk @DianeSwonk]

Correction on the 3-month annualized pace of CPI for October - shows momentum.;
glitch in my program understated the momentum.

October CPI up 5.7% 3-month annualized - ouch - hottest since May.

Core CPI up 3.7% 3-month annualized, hottest since Aprll.

Supper core services up 5% 3-mo annualized, hottest in two years.

Same conclusion. HOT HOT HOT.

[Diane Swonk @DianeSwonk]

@goldbugger No. It is not. The acceleration was broad based and in services. This is what the data are showing. That is why the Fed is more hawkish.

[Diane Swonk @DianeSwonk]

@Ethanfxnc There is no year ago figure due to the six week government shutdown.

[Diane Swonk @DianeSwonk]

@MayorJoeQuimby Actually, the tail on energy prices is quite long due to constraints on refining capacity. Check you analysis.

[Karen Nye @KNyeEcon]

Listen to @WBBMNewsradio in Chicago for the Noon Business Hour to hear @KPMG_US chief economist @DianeSwonk explain why the latest inflation figures are worrisome.