AMNA NAWAZ: Well, hiring was much stronger than expected last month.

Employers added 165,000 new jobs, according to a new government report out today.

Job gains for August and September were revised upward as well by a combined 84,000 jobs.

That makes the last three months of the job market look better than we thought, an average of 137,000 new jobs per month.

But it all comes during a week when questions grew about the sustainability of the AI boom and its impact on the economy.

Markets had a wild ride, losing more than $2.5 trillion in value yesterday before rebounding today.

For some insight, I'm joined now by Diane Swonk.

She's chief economist for KPMG.

That's one of the world's largest firms for professional and tax services.

Diane, welcome back.

Thanks for joining us.

DIANE SWONK, Chief Economist, KPMG: Good to be here.

AMNA NAWAZ: So, stronger-than-expected jobs report, upward revisions for August and September, what does all of this tell you about the labor market right now?

DIANE SWONK: Well, it tells us that we're generating a lot more paychecks, which is great.

That is what's helping to keep aggregate consumer spending afloat, along with wealth effects tied to AI.

The downside is, of course, that even though the unemployment rate fell to 4.1 percent, average hourly earnings rose only 3.1 percent from a year ago.

That's yet another month it will fall short of overall inflation.

That's why it's not resonating to most individuals, because they're actually losing purchasing power out there.

And I think that's important.

We also know the underemployment rate, which includes discouraged workers, those unemployed for a very long time, over 27 weeks, and those forced to take on part-time, instead of full-time work, when they were looking for a full-time job, that rose to 7.9 percent in the unemployment rate.

That's the highest since July and well above anything we saw pre-pandemic.

One more notable issue is that the New York Fed updated the unemployment rate for new college grads, which fell over the summer, but, again, for not the best reasons.

And that is underemployment for new college grads is at its highest level since 2020, during the pandemic.

AMNA NAWAZ: That's concerning news there.

But we also saw that big drop in the markets yesterday that I mentioned, part of a massive tech- and AI-driven sell-off.

We saw the president kind of refer to that drop today.

He attributed to the midterm elections on Tuesday.

Is that what you saw?

Tell us more about that.

DIANE SWONK: Well, what we saw is, first of all, we have been tracking the backlash to AI since the beginning of the year, which has really grown to a crescendo.

It crosses every age, income strata, and party affiliation.

There's just nothing more galvanizing than the fears of job loss due to AI, along with the concerns that people have about a data center in their backyard, their higher electricity costs.

So it collides with the concerns about inflation out there.

And we had already seen market jitters in the month of October, which is why we started modeling both bear case, a bear market scenario, along with a base case where we're able to sort of muddle through and keep the wealth effects going.

But when you're sitting on something that's a one-legged stool, which is the AI boom and the wealth that it generates propelling the economy forward and adding to inflation, that's precarious at best.

At worst, it can tip over fairly easily.

AMNA NAWAZ: So what kind of concerns are investors expressing with those kinds of sell-offs?

How real are the concerns that we're hearing about an AI bubble?

Everyone arguing that, like, housing and, like, the Internet, the investments and spending into AI, are -- gotten way ahead now of profit expectations.

What if it bursts?

What are you hearing?

DIANE SWONK: Well, that's exactly -- it is.

This is not uncommon with the technological innovation.

Innovation requires technology.

Productivity requires trust.

There isn't trust out there.

And the returns on those investments are far in the future.

It takes a long time to scale these innovations to make them as powerful and tap the productivity growth.

But you have also got to make sure that you include human beings and people's lives and livelihoods in the center of that innovation.

People have to see a place for themselves where their fortunes rise with the tide, instead of recede with the shoreline.

AMNA NAWAZ: All right, that is Diane Swonk, chief economist for KPMG, joining us tonight.

Diane, thank you.

It's always great to talk to you.

DIANE SWONK: Thank you.