Economic Impact of Events

How deep is the current trucking freight recession compared to past freight recessions? Below I’ve plotted the dept of each freight recession, with 100 set as the month that was the seasonally adjusted peak of each cycle. Data comes from the extended for-hire trucking ton-mile index that dates back to 1972 (the longest available series of trucking demand, edging the ATA’s tonnage index out by one year). Data are shown for the 24 months following the peak (month 0). Note, the COVID-19 induced freight recession is excluded. Thoughts: •The current freight recession (peak in March 2022) stands as the deepest freight recession without a broader economic recession. At its worst (January 2023), it is double the dept of the prior freight recession (peak in August 2018) that ran through 2019. As of February 2024, seasonally adjusted volume was down ~4% from the March 2022 peak. •What differs with the current cycle compared to, say, the October 2000 Great Offshoring freight recession is that trucking payrolls fell far more sharply in response to that freight recession (an almost 80,000 decline) relative to the current freight recession (a roughly 30,000 decline, but almost all of this is due to the failure of Yellow Corp) (https://lnkd.in/eMSu6XWk). I continue to believe that record profits in 2021 and 2022 (remember, prices were incredibly high throughout that year) have kept many carriers afloat. •To demonstrate the current capacity overhang, if you compare March 2022 payrolls to February 2024 payrolls in truck transportation, the decline is just 0.3%. That explains why the dry van spot market remains so weak. Implication: while I often hear that trucking is a canary in the coal mine for the economy, current economic conditions force us to be humble: we continue to experience a very deep freight recession yet the overall economy is humming along. This demonstrates why GDP figures aren’t a good tool for forecasting trucking market conditions. #supplychain #supplychainmanagement #frieght #shipsandshipping #trucking #logistics #transportation

I’m pleased that President Trump has announced a pause on implementing some of the “reciprocal tariffs” that he announced last week.   In the short-term, tariffs can hurt economic activity. They cause costs to rise, and companies will either absorb those costs, decreasing margins, or pass them on, which will affect pricing and demand. So delaying the tariffs will avoid these short-term impacts.   But we remain in a period of high uncertainty, including the near-term rising risk of an escalating trade war with China. This uncertainty will likely dampen global investment and growth. Every investment decision is based on both risk and return. The large uncertainties in the global trading system have substantially increased risks for most companies.   BCG’s trade and geopolitics experts, put it this way: “Every company, regardless of sector or location, needs to build tariffs and the related uncertainty into its planning and operating model.” In other words, core decision making just got a lot more complicated for business leaders. You can read more from our Global Advantage team on navigating the impact of tariffs: https://lnkd.in/ert8gazK Some companies have already built geopolitical muscle, developing capabilities to anticipate and respond to policy shifts. They’ve set up teams to map out tariff impacts, consider pricing strategies, and work with suppliers to share cost burdens. They should be better positioned to confront the current turbulence and headwinds. But even the leaders of those companies are now asking harder, longer-term questions. All businesses need to understand how sustained high tariffs could affect their supply chains and manufacturing networks—and prepare in advance as much as possible.   Trade battles and higher uncertainty are not what most of us would have wished for, but that’s the world we’re in. Leaders must embed a mindset of resilience grounded in adaptiveness and agility and seek advantage and opportunity amid uncertainty.

Major Update: our Science and Community Impacts Mapping Project (#SCIMaP) team has released an analysis of the economic impacts of the administration's NIH FY26 budget. Bottom-line, we estimate $46B in total economic loss, 202K lost jobs, and impacts in communities nationwide. https://lnkd.in/ef6_7E88 As we show, the impacts will be widespread. Nearly all House districts to experience >$10M in loss. 1/3 of House districts to experience >$100M in loss. An interactive map by house districts and full report is available. In brief, we use NIH grants data from FY20-24 to identify funding baselines and then project anticipated losses due to the >40% budget cuts, while accounting for the $2.56 economic activity supported by each $1 in NIH funding as documented by United for Medical Research. Today's report expands ongoing #SCIMaP analyses to include assessment of impacts of multiple ways that the administration is dismantling support for science and medical research nationwide, including: 1. Reduction in research infrastructure (via "IDC" cuts). 2. Grant terminations by institution, keyword, topic area, and more. 3. Dramatic reductions in baseline NIH support. Today's analysis comes with a reminder. The FY26 budget remains a proposal. Despite attempts to frame proposed cuts as targeted, they are in fact widespread. It is now up to communities all across the country to ask their representatives in Congress if they will propose a budget vision that supports the goal of retaining American leadership in science and medical research. Many thanks to Mallory Harris, Clio Andris, Alyssa (Allie) Sinclair and the entire #SCIMaP team for their work.

$1.7 billion in market value wiped out in just three weeks - all due to one #ransomware attack. One of Britain’s largest retailers, Marks & Spencer (64K employees, ~1500 stores, ~$17B revenue) is still reeling from a cyberattack by the DragonForce ransomware group. It started Easter weekend, was publicly confirmed on April 22nd. We're now weeks into it and they still can’t process online orders or accurately track store inventory. Deutsche Bank estimates they're losing ~$19M per week in profit. According to BleepingComputer, DragonForce gained entry through social engineering, tricking IT helpdesk staff into resetting credentials. This wasn't and isolated incident, the group also targeted two other UK retailers - Co-op (~70K employees) on April 30th and Harrods (~4K employees) on May 1st. Personal data of millions of customers and employees has been exposed. #IT teams are sleeping in offices, and employees now keep cameras on during virtual meetings to verify identities. These attacks mirror the Caesars and MGM 2023 breaches attributed to Scattered Spider. The cybersecurity industry must evolve - we need stronger solutions around identity management, phishing defense, incident response, and backup #resilience. If you're a founder working on new solutions to break this cycle, I'd love to connect.

The US fiscal situation is back in focus following the Moody’s downgrade and steady rise in longer-term Treasury yields. Our latest POTUS 47 report from Thomas Wacker, Kurt Reiman, and Leslie Falconio breaks down the impact going forward. The key summary points: -US budget #deficits should remain elevated for the foreseeable, as tariffs are unlikely to be sufficiently long-term funding source for tax cuts. -Bond yields have not yet reached levels that would force legislators to confront unsustainable debt growth, but that point is drawing closer, as indicated by the recent rise in term premium for longer-dated Treasuries. -We expect that the US government may pursue both fiscal consolidation and financial repression to contain #yields and keep the high debt burden manageable. -Powerful measures of financial repression in the US would likely have global repercussions for asset prices, with the impact depending on the details and prevailing economic and financial market conditions. -Distortions from financial repression may create various tactical trading opportunities, but global diversification remains the most effective way to preserve wealth. Read more below

Want to know what's dominating CEO conversations? Here is the most recent data for Q1 2025 by Philipp Wegner with IoT Analytics - Hot off the Press as of March 25th! 𝐊𝐞𝐲 𝐅𝐢𝐧𝐝𝐢𝐧𝐠𝐬: • 𝐓𝐚𝐫𝐢𝐟𝐟𝐬 𝐓𝐚𝐤𝐞 𝐂𝐞𝐧𝐭𝐞𝐫 𝐒𝐭𝐚𝐠𝐞: CEO mentions of tariffs surged by 190%, surpassing previous peaks as companies grapple with new global trade tensions and policies. CEOs are actively exploring strategies to mitigate or even leverage these tariff impacts. • 𝐔𝐧𝐜𝐞𝐫𝐭𝐚𝐢𝐧𝐭𝐲 𝐒𝐩𝐢𝐤𝐞𝐬: Mentions of uncertainty climbed 49% as geopolitical shifts and trade wars cloud strategic decisions, notably affecting the EMEA region and industrial sector most significantly. • 𝐀𝐈 𝐂𝐨𝐧𝐭𝐢𝐧𝐮𝐞𝐬 𝐑𝐢𝐬𝐢𝐧𝐠 – 𝐄𝐬𝐩𝐞𝐜𝐢𝐚𝐥𝐥𝐲 𝐀𝐠𝐞𝐧𝐭𝐢𝐜 𝐀𝐈: AI remains a priority, with an impressive 275% spike in discussions about Agentic AI—highlighting a strategic shift towards autonomous decision-making technologies designed to boost efficiency and innovation. • 𝐑𝐞𝐜𝐫𝐮𝐢𝐭𝐢𝐧𝐠 𝐇𝐢𝐭𝐬 𝐚 𝐅𝐫𝐞𝐞𝐳𝐞: Amid economic turbulence, CEOs scaled back conversations on hiring by 8% while hiring freeze mentions soared by 286%, signaling cautious approaches towards workforce expansion. 𝐌𝐲 𝐓𝐚𝐤𝐞: CEOs today face complex, interconnected challenges. They’re shifting from optimistic hiring and growth toward defensive positions amidst economic uncertainty and tariff complexities. At the same time, investments in innovative AI, particularly agentic AI, are viewed as strategic ways to navigate these turbulent waters. 𝟑 𝐏𝐢𝐞𝐜𝐞𝐬 𝐨𝐟 𝐀𝐝𝐯𝐢𝐜𝐞: 𝟏. 𝐑𝐞𝐚𝐬𝐬𝐞𝐬𝐬 𝐒𝐮𝐩𝐩𝐥𝐲 𝐂𝐡𝐚𝐢𝐧 𝐑𝐢𝐬𝐤𝐬: Evaluate your exposure to tariffs immediately. Move swiftly to adjust sourcing and production to maintain competitiveness. 𝟐. 𝐒𝐜𝐞𝐧𝐚𝐫𝐢𝐨 𝐏𝐥𝐚𝐧𝐧𝐢𝐧𝐠 𝐢𝐬 𝐂𝐫𝐮𝐜𝐢𝐚𝐥: Strengthen your organization's ability to rapidly respond to geopolitical shifts. Having robust contingency plans can provide stability in uncertain times. 𝟑. 𝐀𝐜𝐜𝐞𝐥𝐞𝐫𝐚𝐭𝐞 𝐀𝐈 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭: Quickly identify and prioritize strategic AI investments—especially autonomous, agentic AI solutions—to drive productivity, agility, and market advantage despite hiring freezes. 𝐅𝐨𝐫 𝐦𝐨𝐫𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐨𝐧 𝐭𝐡𝐢𝐬 𝐫𝐞𝐩𝐨𝐫𝐭: https://lnkd.in/eWWMt47K ******************************************* • Visit www.jeffwinterinsights.com for access to all my content and to stay current on Industry 4.0 and other cool tech trends • Ring the 🔔 for notifications!

On Friday, Moody’s downgraded the U.S. sovereign credit rating from Aaa to Aa1 (one notch down from the highest-grade rating), citing rising government debt and interest payments that are “significantly higher than similarly rated sovereigns.” Moody’s was the last of the three major credit rating agencies to downgrade the U.S. sovereign credit rating. S&P downgraded the U.S. in 2011 due to increased political brinkmanship over the U.S. debt limit; Fitch followed in 2023, citing concerns over fiscal deterioration, rising debt levels, and erosion of governance. Because two rating agencies had already downgraded the U.S., index providers began to reflect a split rating as of August 2023. For this reason, Friday’s Moody’s downgrade did not meaningfully change markets’ interpretation of the U.S. rating – it simply aligned with what it already was. That doesn’t mean there isn’t still room for market reaction, especially as U.S. policy continues to evolve. For example, Moody’s decision comes as Congress considers a reconciliation package that would add $3.4 trillion to the debt over a ten-year period, according to the Yale Budget Lab, increasing U.S. debt-to-GDP from 100% today to 120% in 2034. While the Moody’s decision serves as warning, it is unlikely to sway Congress to significantly rework the current reconciliation bill under consideration. The House has accelerated its timeline for passage, and we may see their version of the bill by the end of this week. As for monetary policy, much remains the same. Higher debt levels make the Federal Reserve’s job harder – adding to inflationary pressure, pushing up interest rates, and, if interest rates rise high enough, potentially crowding out private investment. While the Moody’s decision does not come as a surprise, it reinforces investors’ concerns about rising U.S. debt levels and may encourage further moves away from dollar-denominated assets. It supports our view that rates are likely to be higher and more volatile over the near term. Our team has spent the past few months answering “what’s next” for federal spending and debt sustainability. This year’s edition of our long-term investment research – Megatrends – covers global sovereign debt sustainability. This research will be published in early June and will provide both a comprehensive debt sustainability framework and an investment playbook, with investment choices depending on how major economies choose to manage their debt loads moving forward. More to come... Sarah Hirsch Julia Hermann, CFA Michael LoGalbo, CFA

🚨 I was on CNN Newsroom Live immediately after the United Autoworkers Union (UAW) officially went on strike against the three major automakers, GM, Ford, and Stellantis last night. This action showcases an unprecedented level of coordination and highlights the significant dissatisfaction with the current offers, especially as contracts have now expired. Here are a few key takeaways: 1️⃣ Unprecedented Coordination: UAW's threat against major carmakers signifies deep-seated concerns among union members regarding proposed contracts. This marks the inaugural instance in its history that it has initiated a strike simultaneously against all three of America's unionized automakers. 2️⃣ Key Demands and Wage Gap: UAW seeks a 40% pay increase over four years, a four-day work week, and automatic pay hikes tied to inflation. Workers argue current offers (17.5% to 20%) fall short in light of significant profits. 3️⃣ Potential Economic Impact: A 10-day strike could cost car companies nearly $1 billion and workers nearly $900 million. Broader economic effects could surpass $5 billion, underscoring the automotive industry's influence on the US economy (Anderson Economic Group). 4️⃣ Broader Labor Trends: The strike mirrors rising labor tensions in the US, with over 420 work stoppages last year. This comes amid challenges like a sales slowdown and transition to electric vehicles, potentially leading to consumer price increases due to supply constraints. What's Next: The strike strategy targets key plants initially, potentially escalating. This approach aims to maintain maximum leverage during negotiations. While approximately 12,700 employees are currently striking, the UAW may call for more if progress stalls. A potential tactic could involve targeting engine or transmission factories, significantly impacting production capabilities. This measured approach allows the union to conserve resources for a sustained strike. Stay tuned for further updates on this significant development impacting the automotive industry and the broader economic landscape. Will we see a reaction of automotive industry stocks react to the news? What are your insights on the potential impact of this strike on both the automotive industry and wider labor relations? Anticipating a response in automotive industry stocks following this development. What are your predictions? How long do you anticipate the strike might last? 👇🏾Share your thoughts and insights in the comments below! #Automotive #Business #Leadership #Management #Economy

Foreign aid cuts by wealthy nations will do irreversible damage to global development systems that took decades to build, the head of the United Nations Development Programme has warned. Achim Steiner, whose 10-year service as administrator of the UN’s main global development agency ends on June 16, told the Financial Times that the cuts by the US and European governments amounted to “a retreat from a commitment to investing together in development in our age”... Steiner warned that the aid cuts were already having “life-threatening consequences” in many countries. “You see our inability, for example, through [the World Food Programme], to continue to provide the rations that are needed in refugee camps around the world,” he said. “You can also see that in the way that the UN at the moment is not able to step up in Sudan, where millions of people are internally displaced or have become refugees. “And millions of people . . . with HIV/Aids — literally overnight, clinics are closing, supply chains are disrupted and people are not receiving antiretroviral treatments.”: https://lnkd.in/eY3-6UMX

Interest payments on the national debt just went over $900mm annualized, per FRED and BEA data, and given that the deficit is growing and interest rates are expected to remain high and even higher, it is reasonable to conclude that in a quarter or two we will be over $1 trillion in interest payments. These interest payments at some point will create enormous political pressure on Federal budget negotiations in Congress, and this will lead to Congressional push-back on the Fed to reduce rates. The budget already has about a $1.3T deficit, and these interest payments will contribute more to that. How long will the bond market finance these deficits before demanding more in return? Could a showdown be building for Bond Vigilantes to strike? I don't think Fed Funds can go much higher. The CPI 3% print provides cover to remain at 5.25% which is a symbolic level as it was the high point of Fed Funds before the 2008 financial crisis. I know the Fed wants to put their Paul Volcker hat on and all that, but back when Volcker was in charge, the national debt was 32% of GDP. As of year end 2022, it is at 129% and rising. In addition, the economy was largely manufacturing-driven in 1980, while the value in our economy is largely services-driven now. It's a different ballgame. #fedpolicy #interestrates #riskmanagement