1-9-26 America's Truckin' Network

Number of Americans filing for applications for unemployment benefits rose moderately last week, suggesting that layoffs were relatively low at the end of twenty twenty five, though demand for labor remains sluggish. Initial claims first state unemployment benefits rose eight thousand to a seasonally adjusted two hundred and eight thousand for the week end in December twenty seventh, according to the Labor Department. Economists polled by Reuters had forecasted two

hundred and ten thousand claims for last week. Now I saw another report that said that they had forecasted two hundred and thirteen thousand. So even they can't come up with their can't be consistent with what they expected it to be. Claims have been chopping, and this is let me see, claims have been chopping in recent weeks amid challenges adjusting the data for seasonal fluctuations around the year

end holiday season. Although you know every year the holiday season comes and goes, so they're acting as though that this is the first time they've had this kind of a situation, rather than going back and talking about trends in the past. Through the volatility, layoffs have remained low by historical standards. Now that's a key point because what we keep hearing is that the labor market is weak. And again, if the labor market is weak, people aren't

going to be spending a lot of money. People aren't going to have money to spend, which means that they're going to be going to retailers less, which means that retailers are going to be ordering less, which means that trucks aren't going to have the tonnage that they would normally have. But the fact that unemployment is low and

that these layoffs are minimal. People are out there, people are spending robustly and keeps the wheels of the economy moving and the wheels of the trucking industry, which.

hospitality industry, transportation and onto some of these others. And they were saying that most of the increases came from small businesses less than five hundred employees. So that is in contrast to what they're saying here that many have

not engaged in hiring the popularity and they're holding back. Again, maybe there's a cross current, maybe there's you know, the data that comes in for one report over is fall short of what is available to another report, and the other report may be a little bit more accurate, but I would.

While a separate report from global outplacement firm Challenger, Great and Christmas showed layoffs announced by US based employers jumped fifty eight percent to a five year high of one point two one point two six million in twenty twenty five. Cost cutting by the federal government and technology companies accounted for the bulk of the planned reductions.

seasonally adjusted one point nine to one million. Now that has been up, down, up, down, somewhere around one point eight nine and one point nine to one million over the last month or so. The government reported on Wednesday the job openings dropped by fourteen dropped to a fourteen month low in November. There were point nine to one job openings for every unemployed person in November, the lowest level seen since March of twenty twenty one, and down

from ninety seven point ninety seven in October. So for every person that's out there, there's point nine to one jobs. There's nine tens of one job for every person out there. So if the people would go out and look for the jobs, they may be looking in the wrong area, or it may be a situation if that's not a good fit. It's maybe either above their skill level or below their skill level and would not be something that'd be a good fit. So that would account for a

lot of that. Now, let me see if there's any other gems in here. Non farm payrolls probably increase, Okay, And this is what's interesting again, they get into speculation. The claims data have no bearing on December's employment report that is due out and do to be released later on today on Friday. They go in here and they speculate nonfarm payrolls probably increase sixty thousand jobs last month

after raising sixty four thousand in November. And they're talking about possibility of the unemployment rate coming down, which is what I've been talking about. November unemployment rate was partially distorted by the forty three day long federal government shutdown, you mean the Schumer shutdown, which also prevented the collection of household data for October. The unemployment rate for October was not published for the first time, and the government

started tracking that number back in nineteen forty eight. So according because of Chuck Schumer's Schumer shut down, we didn't get that information as we normally get for the first time since nineteen forty eight.

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two hundred and thirteen. See there is no context in terms of how this plays into where the jobless initial jobless claims have been over a period of time, which is generally between what we've been looking at, is between two hundred and ten and two hundred and fifty thousand. So at two hundred and eight it's below the low end, but of course you're not going to get that from this,

I guess, amateur or whatever. Compared to the previous week's figure of two hundred thousand, the latest data shows an increase of eight thousand new claims.

in technical areas. I mentioned at the time because I had read something along the line that said that is a possibility that some of these companies had, you know, in order to develop AI, that as they were doing it, as they were you know, coding, and they were getting it launched, and then the implementation of it, they may have overhired. And so this is just a leveling of the playing field. Now, this is interesting. AI layoffs are looking more like more like corporate fiction that's masking a

darker reality. This is according to Oxford Economics. Despite the breathless headlines warning of robot takeover in the workforce, a new research briefing from Oxford Economics cast doubts on the narrative that artificial intelligence is currently causing mass unemployment. According to the firm's analysis, quote, firms don't appear to be replacing workers at with AI in a significant scale, suggesting instead that companies may be using the technology as a

cover for routine head count reductions. Just like back to into pandemic, when we heard about supply chain issues, you know, after coming out of that that a lot of that possibly had to do with not knowing how much business was going to come back to a particular company, like a restaurant or retailer, having been closed for several months before they could get back and open, and the fact that they go out and try to rehire some of

the employees that they had. So there were staffing shortages because people were making more money staying on unemployment and the stimulus checks as opposed to getting back to work. So there were a difficulty filling these slots. And as you may remember that some of these staffs were low, and so because the staffs were low, they of course didn't have enough people to handle the volume of business

they had. And because they're ordering techniques were a little skewed, they're a little rusty, they would run out of stuff, but of course they'd blame it on supply chain issues, just like in so many instances. You know, if companies last year were raising prices, they would claim it had to do with tariffs. But when you dug into the numbers and you looked at what they were doing had nothing to do with tariffs. A lot of the stuff

that they raised prices on were domestically produced items. They just wanted to sneak in a price increase and blame it on the tariffs so situation here as far as certain layoffs and a January seventh report, the research firm argued that while anecdotal evidence of job displacement exists, the macroeconomic data does not support the idea of a structural shift in employment caused by automation. Instead, it points to a more cynical corporate strategy.

weak consumer demand or excessive hiring in the past. By framing layoffs as a technological pivot, companies can present themselves as forward thinking innovators rather than business struggling with cyclical downturns. In a recent interview, Wharton management professor Peter Cappelli told Fortune that he's seen research about how because markets typically

celebrate news of job cuts, firms announced phantom layoffs. So if you notice when companies are you know, trying to you know, boost up their stock, they will announce, well, we're going to we're going to announce a certain number of layoffs. And then the investors look at that and say, well, they're being very good stewards of our money. They are trimming you know, their employees and they're going to be more profitable, which means that our stock will be more

and then that boosts up the stock. But as they talk about here phantom layoffs. Now, I want to take you back to the story we had initially talking about jobless claims increase marginally. In that story we talked about Andy Challenger, Chief Revenue Officers Challenger Gray and Christmas. They were talking about how, let me see showed layoffs.

is arbitrage these things. They're trying to play both ends. Again, it's the middle to hope that prop up the stock and some investors or some people kind of lay off on that and don't pay attention to it.

the perception and reality. While AI was cited for the reason for nearly fifty five thousand job cuts in the first eleven months of twenty twenty five, accounting for over seventy five percent of all AI related cuts reported since twenty twenty three, this figure represents a mere four point five percent of total reported job losses, so again over inflating the number of announcements of job cuts only to make sure that people think you're doing well, when in

fact you're doing nothing very interesting. I'm Kevin Gordon, America's truck in Network seven hundred WLW.

high of thirty two. Nationally, parts of Michigan's Upper Peninsula and the Central High Plain seeing heavy snow while freezing rain is possible from the Upper Midwest now into Friday and into the Northeast by Friday evening into Saturday. There is a slight risk of excessive rainfall from parts of the Tennessee Valley to the Lower Mississippi Valley Friday into Saturday morning.

on and that affect the markets. When you dig into the numbers and find out that hey are not as bad as you. And again, if they're putting out these announcements and saying that they're going to be doing certain layoffs, then people having their perception that, oh my gosh, there's going to be a ton of layoffs, the unemployment rate is going to go up, there's going to be you know, job market, the job market is softening, and there's going

to be possibly with people getting layoff like that. The economic downturn when in fact it is merely phantom layoffs, which is just blows my mind. But again, if you miss any part of that, or miss any of our previous shows, hit up that iHeartRadio app and of course that's brought to you by our friends at Rush Truck Centers. Another story that surprised me, and this is from the

Federal Reserve. Okay, the San Francisco Federal Reserve, right again, Federal Reserve twenty three thousand plus employees that work for them. They have twenty you know, a lot of them I assume are economists if you figure that they're in the financial business and financial industry, and they determine as far as you know, the job market, inflation and all that, determining whether or not they should raise or lower interest rates. So you would assume that there'd be some economists in there.

I get this research note from the Federal Reserve San Francisco observed that previous episodes of high tariff rates resulted in lower inflation and mapped out two possible explanations for the phenomenon.

in the later stages of the Biden administration. Well, actually in the beginning of the Biden administration when they did the Inflation Reduction Act, which had nothing to do with inflation reduction but had more to do with green energy programs to be as a windfall to donors of the Democratic Party, and then any of these stimulus bills or of stimulus checks that went out, even though they were warned that that would lead to inflation, they went ahead

and did it anyway. So government spending, out of control government spending leads to inflation, not necessarily tariffs. And here we have the San Francisco Federal Reserve Research Group says the same thing. The fifteen percent increase in the average US tariff rate in twenty twenty five was the largest in the modern era. It pointed out the researchers looked back to before World War Two to see the potential

effects from high tariff rates. Let me see see what the potential effects from high tariff rates might have on the economy. Since World War II, global tariffs dropped from ten percent in nineteen forty five to under three percent by January of twenty twenty five due to the General Agreement on Tariffs and Trade an acronym of GATT or GAT. The last time average tariffs were above fifteen percent occurred

between World War One and World War Two. Prominent theory says tariff shocks tend to increase domestic production costs because the import value it arises.

layoffs hasn't occurred. One possible explanation is that terraff shock generally coincides with the increased economic uncertainty, which by itself depresses economic added activity and puts downward pressure on inflation. Another possible explanation. So they're writing this research paper and they're arguing with them, and yet they got the big headline. The bottom line is that their research is suggesting that

higher tariffs could reduce inflation. Actually, then they get into that apparently their original theories in terms of this is going to lead to inflation, lead to high unemployment, and lead to a possible recession because numbers today don't necessarily match these situation from one.

But they're going to be the stewards and they're going to know what it is all about as far as when to raise interest rates. That's why he keep hearing that Lion Jerry pebble will, at least for me, lion Jerry Powell changes what he's saying in terms of what is going to why, what is going to affect interest rates either increases or decreases, And it's going to be

basically on what his whim is. And if the fact that you look back at the history of the Federal Reserve, they have always been late to the game and either interest rates cuts or interest rate increases, that the damage has already done and all they do is play catch up and the situation continues. And basically this story, with them talking about and arguing about both sides of the issue, they don't even really come to a conclusion except for

the fact that research suggests that higher tears could reduce inflation. Unbelievable, even though all these so called experts back in April we're saying that, oh, this is going to lead to inflation, going to lead to unemployment, high unemployment, and going to result in the possibility of a recession. And yet as we've seen and as we've talked about on this program, it hasn't happened.

say that their predictions were wrong. They'll just explain to why other things happened that changed what they had predicted. It is just absolutely amazing and to a certain extent,

mind boggling. One of the things that is very interesting, and again bringing these things up, bringing up the the fact about unemployment, initial jobless claims, whether or not tariffs are going to increase inflation, which then if it increases inflation, people are not going to be able to afford to buy certain things, which then leaves things on the shelves more people are not buying things, which means that it's

going to adversely affect the trucking industry. But what we're seeing is that the opposite of that, that the employment numbers that we are getting don't pay attention to the announcements, pay attention to what the initial jobless claims are and

what they are. And in one of the stories they were talking about I don't believe I mentioned it, but the fact is that they were saying that now that they have a better handle on what's going on after the holidays and after the Schumer shut down, that it appears as though that the unemployment rate that they had said was up to four point six percent may actually be revised down. And who has been saying that since that number was announce right here on America's truck In

Network once again, listen to this program. You're gonna be far ahead of the curve so far they won't even see your tail lights. One of the other things going on is productivity levels, how much people are producing on the job, whether that number is up or down.

You know, if in an hour period of time, whatever your hourly rate is, if you're producing ten percent more than what you were earlier for whatever reason, maybe job flow, maybe the way things of the supply chain, or something along those lines. If productivity is up, the cost per unit goes down. That would then lower the prices, lower inflation, and then we would have things better on an even keel, and we'd actually see prices coming down. So this is

an important number from that aspect. Again, you have certain topics again when I go into and I search these things, because on a weekly basis, the economic calendar comes out. You know what reports are going to be done on what particular day, and then on that day you can go and search it. But you don't want to go to just one resource. You want to go to several resources so you get an accurate picture of what's going on.

And of course sometimes some reports will actually contradict within the story itself what they're saying, and so by reading a lot more articles about the same issue, you come to a well. In our case, here aut America's truck in network the right conclusion because again we have been right more than we have been wrong on this program.

Look at some of the headlines Barons on their headline, US productivity surges, but AI isn't driving efficiency gains yet, which is kind of ties into what we were seeing earlier that some of these AI gains or some of these AI layoffs aren't necessarily factored in there properly. That it has to do more with over hiring US product This is from Bloomberg dot Com. US productivity picked up

in the third quarter. Labor costs declined again. If the labor costs again, if you're producing more items per hour, then the cost of your labor to that is stretched over a lot more products, which would be then the labor costs would be down.

One of the biggest drivers of the strong US economy, worker productivity surged over the summer and in early fall, raising hopes that investment in artificial intelligence is beginning to pay off.

possibility of higher pay someplace else. And you know, in some instances, you look at certain jobs and they talk about how it takes somewhere between six months to a year or more to get very efficient and knowledgeable of that particular position to the point where you are being very productive. This may not have anything to do with AI, but more the fact that somebody is used to doing this particular job.

do it accurately. So you're going to the cookbook, you're going to the recipe, you're reading the ingredients, you're measuring those out, you're reading and you're saying, Okay, I got to do this step, then I got to do this step, that I have to do this step and this step. Well, after you've done that a few times, then you know what to do, and you could you don't have to keep referring back to the recipe, and it just becomes

memory skills. Of where you know what to put in, you know what to do, and you know how to do it. So on the job market or in the job in the working if you in fact know what you're doing and you have had the experience doing this, then you become more productive at your job. And that could account for a lot of what this productivity increases. Because we are now and to a certain extent, some of these companies have actually told their employees you're no longer working from home.

the trend to continue. Unit labor costs fell one point nine percent in the third quarter to assign that labor costs are now driving inflationary pressures so or not driving inflationary pressures. So again, as the unit costs come down, the cost of that item comes down and it can be sold for a lot cheaper on a year over year basis. Productivity accelerated to one point nine percent gain from one point five percent in the third quarter or

in the prior quarter. In the third quarter, output rose five point four percent annual clip, while the hours work rose point five percent. Hourly compensation adjusted for inflation fell two tenths of one percent in the third quarter. Matthew Martin, senior economists at Oxford Economics. Now Oxford Economics is the group that talked about the AI story and that some of the job layoffs are phantom layoffs and not actual layoffs, so again kind of tying the various stories together together.

offset cost increases. Well, the other side of that is is that they may have cut into their profit margins a little bit. The profit margins again, as I talked about, as far as tariffs are concerned, you have many layers of tariffs. You have something being manufactured in a foreign country, cheaper labor than over here, they have high margins. Before they sell it to the exporter, they maybe absorbed some of those tariffs. The exporter themselves may absorb some of

those tariffs. The importer may absorb some of those tariffs. Again, because you're concerned about you're concerned about customer loyalty and your customer base.