Speaker 1: This is America's Trucking Network with Kevin Gordon.
Speaker 2: Welcome aboard, Thanks for tuning in on this Friday morning. Well,
Speaker 2: now that the dust has settled from the holidays and
Speaker 2: the numbers coming in as far as retail sales, we're
Speaker 2: starting to see those which are positive.
Speaker 3: We've been hearing over the last couple of weeks.
Speaker 2: Volatility as far as employment numbers kind of sketchy always,
Speaker 2: volatility range around the holidays and difficult to pin down. Well,
Speaker 2: we got one of the first I guess after the
Speaker 2: holidays reading as far as unemployment is concerned.
Speaker 3: And this is interesting.
Speaker 2: Once again, I look at when the reports come out,
Speaker 2: I take a look at, I do a search, and
Speaker 2: then I see what headlines are out there. And as always,
Speaker 2: it seems that certain media decides that they're going to
Speaker 2: shade things one way. They're not going to straight up report.
Speaker 2: Let's just get into it here. Let's see.
Speaker 3: I'll get to the worst one first.
Speaker 2: This is from Breaking the News, which is basically what
Speaker 2: they've done. US initial jobless claims up by eight thousand
Speaker 2: to two hundred and eight thousand.
Speaker 3: Sounds bad unless you put it in context.
Speaker 2: FX Street US initial jobless claims rose to two hundred
Speaker 2: and eight thousand last week.
Speaker 3: One that's not one. That's pretty decent.
Speaker 2: US initial job is claims two hundred and eight thousand
Speaker 2: versus two hundred and ten thousand estimated, which is not
Speaker 2: bad investing dot Com initial job is claims.
Speaker 3: Rise but fall short of forecast. And then.
Speaker 2: Ms N their news headline says weekly initial job is
Speaker 2: claims rise less than expected. Now, probably one of the
Speaker 2: best ones, which was kind of a surprise to me,
Speaker 2: was Reuters their headline, US week jobless claims increase marginally,
Speaker 2: which is what in fact the headlines should be, and
Speaker 2: when you get into the numbers, that's exactly what it is.
Speaker 2: Number of Americans filing for applications for unemployment benefits rose
Speaker 2: moderately last week, suggesting that layoffs were relatively low at
Speaker 2: the end of twenty twenty five, though demand for labor
Speaker 2: remains sluggish. Initial claims first state unemployment benefits rose eight
Speaker 2: thousand to a seasonally adjusted two hundred and eight thousand
Speaker 2: for the week end in December twenty seventh, according to
Speaker 2: the Labor Department. Economists polled by Reuters had forecasted two
Speaker 2: hundred and ten thousand claims for last week. Now I
Speaker 2: saw another report that said that they had forecasted two
Speaker 2: hundred and thirteen thousand. So even they can't come up
Speaker 2: with their can't be consistent with what they expected it
Speaker 2: to be. Claims have been chopping, and this is let
Speaker 2: me see, claims have been chopping in recent weeks amid
Speaker 2: challenges adjusting the data for seasonal fluctuations around the year
Speaker 2: end holiday season. Although you know every year the holiday
Speaker 2: season comes and goes, so they're acting as though that
Speaker 2: this is the first time they've had this kind of
Speaker 2: a situation, rather than going back and talking about trends
Speaker 2: in the past. Through the volatility, layoffs have remained low
Speaker 2: by historical standards. Now that's a key point because what
Speaker 2: we keep hearing is that the labor market is weak.
Speaker 2: And again, if the labor market is weak, people aren't
Speaker 2: going to be spending a lot of money. People aren't
Speaker 2: going to have money to spend, which means that they're
Speaker 2: going to be going to retailers less, which means that
Speaker 2: retailers are going to be ordering less, which means that
Speaker 2: trucks aren't going to have the tonnage that they would
Speaker 2: normally have. But the fact that unemployment is low and
Speaker 2: that these layoffs are minimal. People are out there, people
Speaker 2: are spending robustly and keeps the wheels of the economy
Speaker 2: moving and the wheels of the trucking industry, which.
Speaker 3: Is good news.
Speaker 2: Layers have been reluctant to boost headcount amid tariff related
Speaker 2: uncertainty and growing popularity of artificial intelligence, but they have
Speaker 2: not engaged in mass firings and workers, keeping the labor
Speaker 2: market in a state of paralysis, which is contrary to
Speaker 2: what we saw yesterday when we talked about the ADP numbers.
Speaker 2: We saw them with private firms, private payrolls that they
Speaker 2: that they managed was up significantly more than what they
Speaker 2: had expected. And we saw increases in the leisure and
Speaker 2: hospitality industry, transportation and onto some of these others. And
Speaker 2: they were saying that most of the increases came from
Speaker 2: small businesses less than five hundred employees. So that is
Speaker 2: in contrast to what they're saying here that many have
Speaker 2: not engaged in hiring the popularity and they're holding back. Again,
Speaker 2: maybe there's a cross current, maybe there's you know, the
Speaker 2: data that comes in for one report over is fall
Speaker 2: short of what is available to another report, and the
Speaker 2: other report may be a little bit more accurate, but
Speaker 2: I would.
Speaker 3: Tend to lean on the side of ADP.
Speaker 2: Again, as I pointed out yesterday, the fact that they
Speaker 2: were a payroll processing firm, they would know the number
Speaker 2: of checks that they issued last week versus the week before,
Speaker 2: the week before, the week before that, And so if
Speaker 2: they're not seeing any major decreases, and they're in fact
Speaker 2: seeing increases, I think I would rely on those numbers
Speaker 2: because actually they have the head counts where basically the
Speaker 2: check counts in terms of how many checks they're sending out.
Speaker 2: While a separate report from global outplacement firm Challenger, Great
Speaker 2: and Christmas showed layoffs announced by US based employers jumped
Speaker 2: fifty eight percent to a five year high of one
Speaker 2: point two one point two six million in twenty twenty five.
Speaker 2: Cost cutting by the federal government and technology companies accounted
Speaker 2: for the bulk of the planned reductions.
Speaker 3: Now again, let's hold on to that thought.
Speaker 2: According to Andy Challenger, chief revenue officer Challenger Gray and Christmas,
Speaker 2: he said technology has been pivoting to both developing and
Speaker 2: implementing artificial intelligence much more quickly than any other industry This,
Speaker 2: coupled with over hiring over the last decade, created a
Speaker 2: wheak wave of job loss in the industry. Hold on
Speaker 2: to that thought as far as Challenger Gray and Christmas
Speaker 2: talking about the US layoffs announced by US based employers.
Speaker 3: Okay, we'll come back to this.
Speaker 2: Hiring plans dropped thirty four percent to five hundred and
Speaker 2: seven thousand almost five hundred and eight thousand last year,
Speaker 2: the lowest level since twenty ten. Lackluster hiring means unemployed
Speaker 2: people are experiencing longer bouts of joblessness. The number of
Speaker 2: people receiving unemployment benefits for after an initial week of aid,
Speaker 2: a proxy for hiring, increase fifty six thousand to a
Speaker 2: seasonally adjusted one point nine to one million. Now that
Speaker 2: has been up, down, up, down, somewhere around one point
Speaker 2: eight nine and one point nine to one million over
Speaker 2: the last month or so. The government reported on Wednesday
Speaker 2: the job openings dropped by fourteen dropped to a fourteen
Speaker 2: month low in November. There were point nine to one
Speaker 2: job openings for every unemployed person in November, the lowest
Speaker 2: level seen since March of twenty twenty one, and down
Speaker 2: from ninety seven point ninety seven in October. So for
Speaker 2: every person that's out there, there's point nine to one jobs.
Speaker 2: There's nine tens of one job for every person out there.
Speaker 2: So if the people would go out and look for
Speaker 2: the jobs, they may be looking in the wrong area,
Speaker 2: or it may be a situation if that's not a
Speaker 2: good fit. It's maybe either above their skill level or
Speaker 2: below their skill level and would not be something that'd
Speaker 2: be a good fit. So that would account for a
Speaker 2: lot of that. Now, let me see if there's any
Speaker 2: other gems in here. Non farm payrolls probably increase, Okay,
Speaker 2: And this is what's interesting again, they get into speculation.
Speaker 2: The claims data have no bearing on December's employment report
Speaker 2: that is due out and do to be released later
Speaker 2: on today on Friday. They go in here and they
Speaker 2: speculate nonfarm payrolls probably increase sixty thousand jobs last month
Speaker 2: after raising sixty four thousand in November. And they're talking
Speaker 2: about possibility of the unemployment rate coming down, which is
Speaker 2: what I've been talking about. November unemployment rate was partially
Speaker 2: distorted by the forty three day long federal government shutdown,
Speaker 2: you mean the Schumer shutdown, which also prevented the collection
Speaker 2: of household data for October. The unemployment rate for October
Speaker 2: was not published for the first time, and the government
Speaker 2: started tracking that number back in nineteen forty eight. So
Speaker 2: according because of Chuck Schumer's Schumer shut down, we didn't
Speaker 2: get that information as we normally get for the first
Speaker 2: time since nineteen forty eight.
Speaker 3: Thank you, Chuck.
Speaker 2: Some other stories having to do with unemployment those are
Speaker 2: kind of interesting and we'll get to those coming up.
Speaker 2: I'm Kevin Gordon, America's truck In Network seven hundred WLW.
Speaker 1: This is the racing report on America's Trucking Network on
Speaker 1: seven hundred WLW.
Speaker 4: Seven time NASCAR Cup Series champion in Hall of Famer
Speaker 4: Jimmy Johnson will utilize the open Exemption provisional to guarantee
Speaker 4: Johnson spot as the forty first car in the twenty
Speaker 4: twenty six Daytona five hundred, which is thirty seven days away.
Speaker 4: Johnson says he was also Johnson will also return to
Speaker 4: the NASCAR Craftsman Truck Series for its inaugural race at
Speaker 4: Naval Base Coronado in San Diego in June. Hendrick Motorsports
Speaker 4: has partnered with Atrium Health for their team wellness The
Speaker 4: NASCAR Cup Series tests set for North Wilkesboro to work
Speaker 4: on the short next Tuesday, will include drivers Ross Chastain,
Speaker 4: Daniel Suarez, Kyle Busch, Chase Elliott, aj Allmendinger, among others.
Speaker 4: Er mclaar and IndyCar teams have a deal with regional
Speaker 4: airline Republic Airlines for transportation to the races, and IndyCar
Speaker 4: driver Scott McLoughlin will race in the upcoming Rolex twenty four,
Speaker 4: joining fellow drivers Alex Palo, Scott Dixon and Will Power
Speaker 4: in the field.
Speaker 1: This is the racing report on America's drug A Network
Speaker 1: on seven hundred WLW.
Speaker 5: Have a nice weekend, Seg Dennison, a t N. Running
Speaker 5: a business is hard enough. Don't make it harder with
Speaker 5: dozens of apps that don't talk to each other. One
Speaker 5: for sales, another for inventory, a separate one for accounting.
Speaker 5: That's software overload. OJU is the all in one platform
Speaker 5: that replaces them all CRM, accounting, inventory, e commerce, HR
Speaker 5: fully integrated and easy to use and built to grow
Speaker 5: with your business. Thousands have already made the switch. Why
Speaker 5: not you try odo for free at odoo dot com.
Speaker 5: That's o do dot com.
Speaker 2: Kevin Gordon, America Instructing Network seven hundred WLW. Just so
Speaker 2: you can feel a little sorry for me here, because
Speaker 2: I dig through these numbers. I read these stories and
Speaker 2: then come up with the stories for this show. And
Speaker 2: sometimes it's a little painful to read some of these
Speaker 2: stories because of the how should I say, the lack
Speaker 2: of intelligence put into this, And yet.
Speaker 3: Those are the things that start to make some headlines.
Speaker 2: This is from investing dot Com, of all people, this
Speaker 2: story almost seems like it was written by an amateur,
Speaker 2: somebody that has just that this was their first job
Speaker 2: assignment initial.
Speaker 3: Listen to some of these phrases in here.
Speaker 2: The latest data on initial jobless claims, a key indicator
Speaker 2: of the health of the US labor market that got
Speaker 2: that as of of a boiler plate, I'm sure, has
Speaker 2: been released showing an uptick in the number of individuals
Speaker 2: filing for unemployment insurance for the first time. The actual
Speaker 2: number of new jobless claims stood at two hundred and
Speaker 2: eight thousand according to the report, This figure, while higher
Speaker 2: than the previous week, fell short of economists forecast of
Speaker 2: two hundred and thirteen. See there is no context in
Speaker 2: terms of how this plays into where the jobless initial
Speaker 2: jobless claims have been over a period of time, which
Speaker 2: is generally between what we've been looking at, is between
Speaker 2: two hundred and ten and two hundred and fifty thousand.
Speaker 2: So at two hundred and eight it's below the low end,
Speaker 2: but of course you're not going to get that from this,
Speaker 2: I guess, amateur or whatever. Compared to the previous week's
Speaker 2: figure of two hundred thousand, the latest data shows an
Speaker 2: increase of eight thousand new claims.
Speaker 3: This represents four percent rise in.
Speaker 2: The initial jobless claims, signaling a slight slowdown in the
Speaker 2: labor market. However, it's important to note that the weekly
Speaker 2: figures can be volatile and are often subject to substantial revisions. Again,
Speaker 2: almost like a rookie situation. They're reading that now, this
Speaker 2: is an interesting take on this and digging into some
Speaker 2: of these numbers and digging into some of these reports.
Speaker 3: I mentioned yesterday when.
Speaker 2: We were talking about the job increases from ADP in
Speaker 2: their reporting, and they said in one of the sectors
Speaker 2: that even though there was job increases in hospitality, healthcare
Speaker 2: and so on, and even in transportation, it was offset
Speaker 2: by decreases in business services. Professionals and in data processing
Speaker 2: in technical areas. I mentioned at the time because I
Speaker 2: had read something along the line that said that is
Speaker 2: a possibility that some of these companies had, you know,
Speaker 2: in order to develop AI, that as they were doing it,
Speaker 2: as they were you know, coding, and they were getting
Speaker 2: it launched, and then the implementation of it, they may
Speaker 2: have overhired. And so this is just a leveling of
Speaker 2: the playing field. Now, this is interesting. AI layoffs are
Speaker 2: looking more like more like corporate fiction that's masking a
Speaker 2: darker reality. This is according to Oxford Economics. Despite the
Speaker 2: breathless headlines warning of robot takeover in the workforce, a
Speaker 2: new research briefing from Oxford Economics cast doubts on the
Speaker 2: narrative that artificial intelligence is currently causing mass unemployment. According
Speaker 2: to the firm's analysis, quote, firms don't appear to be
Speaker 2: replacing workers at with AI in a significant scale, suggesting
Speaker 2: instead that companies may be using the technology as a
Speaker 2: cover for routine head count reductions. Just like back to
Speaker 2: into pandemic, when we heard about supply chain issues, you know,
Speaker 2: after coming out of that that a lot of that
Speaker 2: possibly had to do with not knowing how much business
Speaker 2: was going to come back to a particular company, like
Speaker 2: a restaurant or retailer, having been closed for several months
Speaker 2: before they could get back and open, and the fact
Speaker 2: that they go out and try to rehire some of
Speaker 2: the employees that they had. So there were staffing shortages
Speaker 2: because people were making more money staying on unemployment and
Speaker 2: the stimulus checks as opposed to getting back to work.
Speaker 2: So there were a difficulty filling these slots. And as
Speaker 2: you may remember that some of these staffs were low,
Speaker 2: and so because the staffs were low, they of course
Speaker 2: didn't have enough people to handle the volume of business
Speaker 2: they had. And because they're ordering techniques were a little skewed,
Speaker 2: they're a little rusty, they would run out of stuff,
Speaker 2: but of course they'd blame it on supply chain issues,
Speaker 2: just like in so many instances. You know, if companies
Speaker 2: last year were raising prices, they would claim it had
Speaker 2: to do with tariffs. But when you dug into the
Speaker 2: numbers and you looked at what they were doing had
Speaker 2: nothing to do with tariffs. A lot of the stuff
Speaker 2: that they raised prices on were domestically produced items. They
Speaker 2: just wanted to sneak in a price increase and blame
Speaker 2: it on the tariffs so situation here as far as
Speaker 2: certain layoffs and a January seventh report, the research firm
Speaker 2: argued that while anecdotal evidence of job displacement exists, the
Speaker 2: macroeconomic data does not support the idea of a structural
Speaker 2: shift in employment caused by automation. Instead, it points to
Speaker 2: a more cynical corporate strategy.
Speaker 3: Quote.
Speaker 2: We suspect some firms are trying to dress up layoffs
Speaker 2: as good news stories rather than bad news such as
Speaker 2: pass over hiring, which is what I mentioned last yesterday
Speaker 2: into this. Primary motivation for this rebranding of job cuts
Speaker 2: appears to be investor relations. The report notes that attributing
Speaker 2: staff reductions to AI adoption conveys a more positive message
Speaker 2: to investors than admitting the traditional business failures such as
Speaker 2: weak consumer demand or excessive hiring in the past. By
Speaker 2: framing layoffs as a technological pivot, companies can present themselves
Speaker 2: as forward thinking innovators rather than business struggling with cyclical downturns.
Speaker 2: In a recent interview, Wharton management professor Peter Cappelli told
Speaker 2: Fortune that he's seen research about how because markets typically
Speaker 2: celebrate news of job cuts, firms announced phantom layoffs. So
Speaker 2: if you notice when companies are you know, trying to
Speaker 2: you know, boost up their stock, they will announce, well,
Speaker 2: we're going to we're going to announce a certain number
Speaker 2: of layoffs. And then the investors look at that and say, well,
Speaker 2: they're being very good stewards of our money. They are
Speaker 2: trimming you know, their employees and they're going to be
Speaker 2: more profitable, which means that our stock will be more
Speaker 2: and then that boosts up the stock. But as they
Speaker 2: talk about here phantom layoffs. Now, I want to take
Speaker 2: you back to the story we had initially talking about
Speaker 2: jobless claims increase marginally. In that story we talked about
Speaker 2: Andy Challenger, Chief Revenue Officers Challenger Gray and Christmas. They
Speaker 2: were talking about how, let me see showed layoffs.
Speaker 3: Announced by US.
Speaker 2: Employers jumped fifty eight percent to a five year high
Speaker 2: of one point two million.
Speaker 3: They said, the layoff.
Speaker 2: Announced by US based employers, Now those may not have
Speaker 2: come true.
Speaker 3: They may have.
Speaker 2: Been as they refer to in this story we're talking
Speaker 2: about that they actually are phantom layoffs trying to stimulate
Speaker 2: the stock market.
Speaker 3: Isn't that interesting? Okay?
Speaker 2: Investors typically celebrate news of job cuts, firms announce phantom
Speaker 2: layoffs that never actually occur. Companies were arbitrarily let me
Speaker 2: see arbitraging or arbitraging in other words, misleading the numbers.
Speaker 2: There the positive stock market reaction to the news of
Speaker 2: a potential layoff, but a few decades ago the market
Speaker 2: stopped going up because of investors starting to realize that
Speaker 2: companies were not actually even doing the layoffs that they
Speaker 2: were trying to do. So what they're trying to do
Speaker 2: is arbitrage these things. They're trying to play both ends. Again,
Speaker 2: it's the middle to hope that prop up the stock
Speaker 2: and some investors or some people kind of lay off
Speaker 2: on that and don't pay attention to it.
Speaker 3: But still you see stories.
Speaker 2: Like from Challenger Gray and Christmas that's saying that these
Speaker 2: layoffs have been announced, but they haven't come to fruition,
Speaker 2: and so this is one of the things that's kind
Speaker 2: of mutting the waters here data behind the hype. Oxford
Speaker 2: Reports highlighted data from Challenger Gray and Christmas, the recruiting
Speaker 2: firm that is one of the leading providers of this
Speaker 2: kind of data layoff data, to illustrate the disparity between
Speaker 2: the perception and reality. While AI was cited for the
Speaker 2: reason for nearly fifty five thousand job cuts in the
Speaker 2: first eleven months of twenty twenty five, accounting for over
Speaker 2: seventy five percent of all AI related cuts reported since
Speaker 2: twenty twenty three, this figure represents a mere four point
Speaker 2: five percent of total reported job losses, so again over
Speaker 2: inflating the number of announcements of job cuts only to
Speaker 2: make sure that people think you're doing well, when in
Speaker 2: fact you're doing nothing very interesting. I'm Kevin Gordon, America's
Speaker 2: truck in Network seven hundred WLW.
Speaker 6: Here's your trucking forecast for the Try State and the
Speaker 6: rest of the country and the Try State. Overnight mostly
Speaker 6: claudi with rain near day break, the low down to
Speaker 6: fifty seven morning rain for Friday, a high of sixty six.
Speaker 6: Rain Saturday, coming to an end by early afternoon. Otherwise Claudia,
Speaker 6: high of fifty three, mostly Claudia and colder Sunday a
Speaker 6: high of thirty two. Nationally, parts of Michigan's Upper Peninsula
Speaker 6: and the Central High Plain seeing heavy snow while freezing
Speaker 6: rain is possible from the Upper Midwest now into Friday
Speaker 6: and into the Northeast by Friday evening into Saturday. There
Speaker 6: is a slight risk of excessive rainfall from parts of
Speaker 6: the Tennessee Valley to the Lower Mississippi Valley Friday into
Speaker 6: Saturday morning.
Speaker 2: Seven hundred IM Kevin Gordon is as America's struck a network.
Speaker 2: You know, I've had, you know, more of a chance
Speaker 2: to you ponder that, you know, before you know, I
Speaker 2: was putting the show prep together, I was reading that
Speaker 2: stuff about inflating the job layoff announcements versus what has
Speaker 2: actually happened. Just the amount of how do you say,
Speaker 2: just trying to dupe the investors, trying to It blows
Speaker 2: my mind that all these things that people pick up
Speaker 2: on and that affect the markets. When you dig into
Speaker 2: the numbers and find out that hey are not as
Speaker 2: bad as you. And again, if they're putting out these
Speaker 2: announcements and saying that they're going to be doing certain layoffs,
Speaker 2: then people having their perception that, oh my gosh, there's
Speaker 2: going to be a ton of layoffs, the unemployment rate
Speaker 2: is going to go up, there's going to be you know,
Speaker 2: job market, the job market is softening, and there's going
Speaker 2: to be possibly with people getting layoff like that. The
Speaker 2: economic downturn when in fact it is merely phantom layoffs,
Speaker 2: which is just blows my mind. But again, if you
Speaker 2: miss any part of that, or miss any of our
Speaker 2: previous shows, hit up that iHeartRadio app and of course
Speaker 2: that's brought to you by our friends at Rush Truck Centers.
Speaker 2: Another story that surprised me, and this is from the
Speaker 2: Federal Reserve. Okay, the San Francisco Federal Reserve, right again,
Speaker 2: Federal Reserve twenty three thousand plus employees that work for them.
Speaker 2: They have twenty you know, a lot of them I
Speaker 2: assume are economists if you figure that they're in the
Speaker 2: financial business and financial industry, and they determine as far
Speaker 2: as you know, the job market, inflation and all that,
Speaker 2: determining whether or not they should raise or lower interest rates.
Speaker 2: So you would assume that there'd be some economists in there.
Speaker 2: I get this research note from the Federal Reserve San
Speaker 2: Francisco observed that previous episodes of high tariff rates resulted
Speaker 2: in lower inflation and mapped out two possible explanations for
Speaker 2: the phenomenon.
Speaker 3: What have I been.
Speaker 2: Saying since Liberation Day back on April the second? Digging
Speaker 2: back into my economics class when I was in college,
Speaker 2: listening to people like Larry Kudlow, listening to people like
Speaker 2: our friend Phil Flynn with Price Futures Group, listening to
Speaker 2: people Kevin O'Leary from Shark Tank talking about that it's
Speaker 2: not tariffs that add to inflation. It's overspending. It's out
Speaker 2: of control spending by the federal government, which we saw
Speaker 2: in the later stages of the Biden administration. Well, actually
Speaker 2: in the beginning of the Biden administration when they did
Speaker 2: the Inflation Reduction Act, which had nothing to do with
Speaker 2: inflation reduction but had more to do with green energy
Speaker 2: programs to be as a windfall to donors of the
Speaker 2: Democratic Party, and then any of these stimulus bills or
Speaker 2: of stimulus checks that went out, even though they were
Speaker 2: warned that that would lead to inflation, they went ahead
Speaker 2: and did it anyway. So government spending, out of control
Speaker 2: government spending leads to inflation, not necessarily tariffs. And here
Speaker 2: we have the San Francisco Federal Reserve Research Group says
Speaker 2: the same thing. The fifteen percent increase in the average
Speaker 2: US tariff rate in twenty twenty five was the largest
Speaker 2: in the modern era. It pointed out the researchers looked
Speaker 2: back to before World War Two to see the potential
Speaker 2: effects from high tariff rates. Let me see see what
Speaker 2: the potential effects from high tariff rates might have on
Speaker 2: the economy. Since World War II, global tariffs dropped from
Speaker 2: ten percent in nineteen forty five to under three percent
Speaker 2: by January of twenty twenty five due to the General
Speaker 2: Agreement on Tariffs and Trade an acronym of GATT or GAT.
Speaker 2: The last time average tariffs were above fifteen percent occurred
Speaker 2: between World War One and World War Two. Prominent theory
Speaker 2: says tariff shocks tend to increase domestic production costs because
Speaker 2: the import value it arises.
Speaker 3: So if you have higher costs.
Speaker 2: Coming in, of course you're going to have higher costs
Speaker 2: going out. That's one theory we've talked about that our
Speaker 2: estimate suggests the opposite, however, with the shocks from higher
Speaker 2: terriffs leading to both higher unemployment and lower inflation. Of
Speaker 2: this note said, however, what they're talking about that in
Speaker 2: the past that high inflation or partial inflation or low
Speaker 2: layoffs hasn't occurred. One possible explanation is that terraff shock
Speaker 2: generally coincides with the increased economic uncertainty, which by itself
Speaker 2: depresses economic added activity and puts downward pressure on inflation.
Speaker 2: Another possible explanation. So they're writing this research paper and
Speaker 2: they're arguing with them, and yet they got the big headline.
Speaker 2: The bottom line is that their research is suggesting that
Speaker 2: higher tariffs could reduce inflation. Actually, then they get into
Speaker 2: that apparently their original theories in terms of this is
Speaker 2: going to lead to inflation, lead to high unemployment, and
Speaker 2: lead to a possible recession because numbers today don't necessarily
Speaker 2: match these situation from one.
Speaker 3: Hundred years ago.
Speaker 2: So again, these are economists, These people you would think
Speaker 2: would have a basic understanding of the history of economics,
Speaker 2: the push and pull from different sectors of the economy,
Speaker 2: whether tariffs increase, tariffs decrease, inflation up, inflation down, or
Speaker 2: what are the actual pressures on the economy. And yet
Speaker 2: the people that are on the federal that in the
Speaker 2: Federal Reserve, that they cannot get their handle on it.
Speaker 2: But they're going to be the stewards and they're going
Speaker 2: to know what it is all about as far as
Speaker 2: when to raise interest rates. That's why he keep hearing
Speaker 2: that Lion Jerry pebble will, at least for me, lion
Speaker 2: Jerry Powell changes what he's saying in terms of what
Speaker 2: is going to why, what is going to affect interest
Speaker 2: rates either increases or decreases, And it's going to be
Speaker 2: basically on what his whim is. And if the fact
Speaker 2: that you look back at the history of the Federal Reserve,
Speaker 2: they have always been late to the game and either
Speaker 2: interest rates cuts or interest rate increases, that the damage
Speaker 2: has already done and all they do is play catch
Speaker 2: up and the situation continues. And basically this story, with
Speaker 2: them talking about and arguing about both sides of the issue,
Speaker 2: they don't even really come to a conclusion except for
Speaker 2: the fact that research suggests that higher tears could reduce inflation. Unbelievable,
Speaker 2: even though all these so called experts back in April
Speaker 2: we're saying that, oh, this is going to lead to inflation,
Speaker 2: going to lead to unemployment, high unemployment, and going to
Speaker 2: result in the possibility of a recession. And yet as
Speaker 2: we've seen and as we've talked about on this program,
Speaker 2: it hasn't happened.
Speaker 3: So isn't that amazing?
Speaker 2: I go back to this saying, and I keep bringing
Speaker 2: it up because the more and more you read it,
Speaker 2: and the more and more you hear it, the more
Speaker 2: it's true. An economist is an expert who will know
Speaker 2: tomorrow why the things he predicted yesterday didn't happen today.
Speaker 2: So everything they do is always in the hindsight. They'll
Speaker 2: explain why stuff that they predicted didn't happen. They won't
Speaker 2: say that their predictions were wrong. They'll just explain to
Speaker 2: why other things happened that changed what they had predicted.
Speaker 2: It is just absolutely amazing and to a certain extent,
Speaker 2: mind boggling. One of the things that is very interesting,
Speaker 2: and again bringing these things up, bringing up the the
Speaker 2: fact about unemployment, initial jobless claims, whether or not tariffs
Speaker 2: are going to increase inflation, which then if it increases inflation,
Speaker 2: people are not going to be able to afford to
Speaker 2: buy certain things, which then leaves things on the shelves
Speaker 2: more people are not buying things, which means that it's
Speaker 2: going to adversely affect the trucking industry. But what we're
Speaker 2: seeing is that the opposite of that, that the employment
Speaker 2: numbers that we are getting don't pay attention to the announcements,
Speaker 2: pay attention to what the initial jobless claims are and
Speaker 2: what they are. And in one of the stories they
Speaker 2: were talking about I don't believe I mentioned it, but
Speaker 2: the fact is that they were saying that now that
Speaker 2: they have a better handle on what's going on after
Speaker 2: the holidays and after the Schumer shut down, that it
Speaker 2: appears as though that the unemployment rate that they had
Speaker 2: said was up to four point six percent may actually
Speaker 2: be revised down. And who has been saying that since
Speaker 2: that number was announce right here on America's truck In
Speaker 2: Network once again, listen to this program. You're gonna be
Speaker 2: far ahead of the curve so far they won't even
Speaker 2: see your tail lights. One of the other things going
Speaker 2: on is productivity levels, how much people are producing on
Speaker 2: the job, whether that number is up or down.
Speaker 3: We'll be talking about that coming up.
Speaker 2: I'm Kevin Gordon, America's struck a Network seven hundred WLW.
Speaker 7: News Radio seven hundred WLW and iHeartRadio Station Guaranteed Human
Speaker 7: seven hundred WLW, HI Hard Radio Live.
Speaker 2: This is America's struck In Network, seven hundred WLW.
Speaker 3: I'm Kevin Gordon.
Speaker 2: Labor productivity again, this is good news, can be good news,
Speaker 2: can be bad news because Again, if people on the
Speaker 2: job are producing more and their productivity is up, then
Speaker 2: that means more goods are on on the market. And
Speaker 2: because people are more productive, then the employment costs stretched
Speaker 2: out over the number of units that are actually manufactured.
Speaker 2: You know, if in an hour period of time, whatever
Speaker 2: your hourly rate is, if you're producing ten percent more
Speaker 2: than what you were earlier for whatever reason, maybe job flow,
Speaker 2: maybe the way things of the supply chain, or something
Speaker 2: along those lines. If productivity is up, the cost per
Speaker 2: unit goes down. That would then lower the prices, lower inflation,
Speaker 2: and then we would have things better on an even keel,
Speaker 2: and we'd actually see prices coming down. So this is
Speaker 2: an important number from that aspect. Again, you have certain
Speaker 2: topics again when I go into and I search these things,
Speaker 2: because on a weekly basis, the economic calendar comes out.
Speaker 2: You know what reports are going to be done on
Speaker 2: what particular day, and then on that day you can
Speaker 2: go and search it. But you don't want to go
Speaker 2: to just one resource. You want to go to several
Speaker 2: resources so you get an accurate picture of what's going on.
Speaker 2: And of course sometimes some reports will actually contradict within
Speaker 2: the story itself what they're saying, and so by reading
Speaker 2: a lot more articles about the same issue, you come
Speaker 2: to a well. In our case, here aut America's truck
Speaker 2: in network the right conclusion because again we have been
Speaker 2: right more than we have been wrong on this program.
Speaker 2: Look at some of the headlines Barons on their headline,
Speaker 2: US productivity surges, but AI isn't driving efficiency gains yet,
Speaker 2: which is kind of ties into what we were seeing
Speaker 2: earlier that some of these AI gains or some of
Speaker 2: these AI layoffs aren't necessarily factored in there properly. That
Speaker 2: it has to do more with over hiring US product
Speaker 2: This is from Bloomberg dot Com. US productivity picked up
Speaker 2: in the third quarter. Labor costs declined again. If the
Speaker 2: labor costs again, if you're producing more items per hour,
Speaker 2: then the cost of your labor to that is stretched
Speaker 2: over a lot more products, which would be then the
Speaker 2: labor costs would be down.
Speaker 3: Third quarter.
Speaker 2: According to Reuter's third quarter productivity rises at.
Speaker 3: Fastest pace in two years.
Speaker 2: Taking a look at that particular story at US economy,
Speaker 2: secret weapon surges in a third quarter, raising hopes of
Speaker 2: AI payoff again. A lot of talk about AI and AI,
Speaker 2: depending upon how it's used in the workforce can make
Speaker 2: you more productive, make things a lot easier for you
Speaker 2: to handle, and may do some of the research not
Speaker 2: necessarily lead to layoffs, but actually make the employees that
Speaker 2: are there little bit more efficient, which is always good.
Speaker 2: One of the biggest drivers of the strong US economy,
Speaker 2: worker productivity surged over the summer and in early fall,
Speaker 2: raising hopes that investment in artificial intelligence is beginning to
Speaker 2: pay off.
Speaker 3: US productivity accelerated at a.
Speaker 2: Four point nine percent annual clip in the third quarter.
Speaker 2: The government said on Thursday. The game was in liign
Speaker 2: with what forecasts of economists surveyed by the Wall Street Journal.
Speaker 2: Productivity has been steadily improving, and some economists expect the
Speaker 2: trend to continue. You know, quite honestly, this could also
Speaker 2: be the fact that since the pandemic, people are back
Speaker 2: to work, they had not been on the job, or
Speaker 2: they had switched jobs as a result of maybe the
Speaker 2: possibility of higher pay someplace else. And you know, in
Speaker 2: some instances, you look at certain jobs and they talk
Speaker 2: about how it takes somewhere between six months to a
Speaker 2: year or more to get very efficient and knowledgeable of
Speaker 2: that particular position to the point where you are being
Speaker 2: very productive. This may not have anything to do with AI,
Speaker 2: but more the fact that somebody is used to doing
Speaker 2: this particular job.
Speaker 3: They know some of the shortcuts.
Speaker 2: Because if you've ever done any cooking, if you've ever
Speaker 2: done any baking, if you start off and you've never
Speaker 2: done the recipe before, you are going to be going
Speaker 2: line by line because you know, if you look at
Speaker 2: the recipe, it'll say, oh, the preparation time is ten minutes,
Speaker 2: and the baking time or the cooking time is exercise,
Speaker 2: and it gives you all these statistics. But if you've
Speaker 2: never prepared it before, that preparation time may be double
Speaker 2: or triple because you're making sure that you want to
Speaker 2: do it accurately. So you're going to the cookbook, you're
Speaker 2: going to the recipe, you're reading the ingredients, you're measuring
Speaker 2: those out, you're reading and you're saying, Okay, I got
Speaker 2: to do this step, then I got to do this step,
Speaker 2: that I have to do this step and this step. Well,
Speaker 2: after you've done that a few times, then you know
Speaker 2: what to do, and you could you don't have to
Speaker 2: keep referring back to the recipe, and it just becomes
Speaker 2: memory skills. Of where you know what to put in,
Speaker 2: you know what to do, and you know how to
Speaker 2: do it. So on the job market or in the
Speaker 2: job in the working if you in fact know what
Speaker 2: you're doing and you have had the experience doing this,
Speaker 2: then you become more productive at your job. And that
Speaker 2: could account for a lot of what this productivity increases.
Speaker 2: Because we are now and to a certain extent, some
Speaker 2: of these companies have actually told their employees you're no
Speaker 2: longer working from home.
Speaker 3: We want you back in the office.
Speaker 2: And maybe because they're back in the office, or a
Speaker 2: lot of companies are back in the office, the productivity
Speaker 2: is up. People aren't home, they aren't messing around on
Speaker 2: the computer, but you know, doing whatever they're doing, and
Speaker 2: they're actually on the job being more productive. That isn't
Speaker 2: covered in here, but that's the theory I'm putting out there.
Speaker 2: Productivity has steadily be increasing, improving, and some economists expect
Speaker 2: the trend to continue. Unit labor costs fell one point
Speaker 2: nine percent in the third quarter to assign that labor
Speaker 2: costs are now driving inflationary pressures so or not driving
Speaker 2: inflationary pressures. So again, as the unit costs come down,
Speaker 2: the cost of that item comes down and it can
Speaker 2: be sold for a lot cheaper on a year over
Speaker 2: year basis. Productivity accelerated to one point nine percent gain
Speaker 2: from one point five percent in the third quarter or
Speaker 2: in the prior quarter. In the third quarter, output rose
Speaker 2: five point four percent annual clip, while the hours work
Speaker 2: rose point five percent. Hourly compensation adjusted for inflation fell
Speaker 2: two tenths of one percent in the third quarter. Matthew Martin,
Speaker 2: senior economists at Oxford Economics. Now Oxford Economics is the
Speaker 2: group that talked about the AI story and that some
Speaker 2: of the job layoffs are phantom layoffs and not actual layoffs,
Speaker 2: so again kind of tying the various stories together together.
Speaker 3: Productivity will be.
Speaker 2: A key to determining the economy's speed limit and inflationary dynamics.
Speaker 2: If productivity growth continues to accelerate due to tax cuts, deregulation,
Speaker 2: and technological advancements, including AI, economic growth can pick up
Speaker 2: without causing unwanted inflation. According to the Richmond Fed, President
Speaker 2: Tom Barkin said in a speech on Monday, reluctant to
Speaker 2: pass along higher prices from President Donald Trump's tariffs to
Speaker 2: their customers, businesses have used automation and reduced hiring to
Speaker 2: offset cost increases. Well, the other side of that is
Speaker 2: is that they may have cut into their profit margins
Speaker 2: a little bit. The profit margins again, as I talked about,
Speaker 2: as far as tariffs are concerned, you have many layers
Speaker 2: of tariffs. You have something being manufactured in a foreign country,
Speaker 2: cheaper labor than over here, they have high margins. Before
Speaker 2: they sell it to the exporter, they maybe absorbed some
Speaker 2: of those tariffs. The exporter themselves may absorb some of
Speaker 2: those tariffs. The importer may absorb some of those tariffs. Again,
Speaker 2: because you're concerned about you're concerned about customer loyalty and
Speaker 2: your customer base.
Speaker 3: You don't want to lose that, so you.
Speaker 2: Absorb that a little bit at the importer level. Then
Speaker 2: it goes to the wholesaler, and then to the retailer
Speaker 2: and then to the customer. So because of trying to
Speaker 2: maintain market share, these companies are absorbing this.
Speaker 3: Along the way.
Speaker 2: So again, this may not be just all according to
Speaker 2: the FED, that that people are automation is reducing these costs,
Speaker 2: because there's really no sign of that. Well, folks, we're
Speaker 2: up against the clock here. Time for us to scoot
Speaker 2: out the door. I hope you have a great weekend.
Speaker 2: Stay tuned for red Eye Radio at the top of
Speaker 2: the hour. I'm Kevin Gordon, America's truck in Network seven
Speaker 2: hundred WLW