“The only groups that feel good about the economy now are making over $200,000 in the surveys and have large stock portfolios,” Swonk said.
Beneath the surface, she argues, the U.S. is running on shaky footing, both economically and in terms of the quality of the data that guides policymakers.
Swonk pointed out that many of the categories holding inflation steady are either insulated from tariffs or benefiting from temporary waivers: computers, smartphones, and some vehicle imports. Once those fade, “goods prices are still moving up,” she said, with few signs of broad-based disinflation. Core services less shelter—a metric the Fed watches closely—rose about 0.4% in September, Swonk estimated, and remains more than 3% higher than a year ago, “well above anything we saw pre-pandemic.”
The result is a headline inflation rate that understates the pain for the median household.
“People are making tough tradeoffs in their baskets,” Swonk said. “The economy looks better on paper than it feels to the majority of Americans.”
“We’re comparing something that’s similar in price, but it’s not apples to apples,” she said. “You just don’t have as many people in the field taking those samples.”
That means official inflation readings may be smoother than the real-world volatility consumers experience, particularly for categories where local price swings or shortages matter most, such as in beef prices.
For the Fed, that introduces a serious blind spot. Policymakers rely heavily on inflation data to calibrate rate cuts, and if the CPI is built on incomplete sampling, it risks reinforcing the perception that inflation is easing faster than it actually is.
“These are still not completely clean numbers,” Swonk cautioned. “The problem isn’t the shutdown. It’s the staffing shortages we had going into it.”
To Swonk, the slow breakdown in how we measure the economy itself is almost the bigger story than the monthly inflation. Asked if she was worried that the markets and the U.S. consumer broadly might become skeptical of the BLS, or even accuse the bureau of politicization, Swonk sighed wearily.
“Trust in the data has already been eroding for decades,” Swonk said. “Now it’s accelerating.”
Looking forward, Swonk expects the economy to slow “dramatically” in the fourth quarter, a turn she says was already coming before the shutdown drained 750,000 federal paychecks from the economy. Consumer stress, rising delinquencies, and tariff pass-throughs will all collide with a fragile labor market and weaker retail season.
“We’re going into a very difficult holiday season,” she said, noting that surveys show consumers “want cash more than anything else,” a reflection of financial anxiety rather than confidence.
The government’s tariff waivers may soften some price increases, but she expects uneven effects across sectors. Many tariff-related price pressures “are still ahead of us,” Swonk said.
