I’ve always been fascinated by trucks – big trucks; the ones with 18 wheels – and the men and women who drive them.
My first full-time job offer out of college way back in the day was from the American Trucking Association. That I declined that position to take one with another DC nonprofit didn’t negate my lifelong fascination.
One of my fondest memories of that era is my casual friendship with a guy who worked for National Geographic during the week and drove 500-1,000 miles roundtrip on weekends as an independent truck driver.
When he retired from National Geo, he drove a lot more miles every week in his big truck to support his true love (well, actually, true loves – if you count his lovely wife!).
When I read over a year ago about the nation’s big shortage of truck drivers, I worried about people like my old friend, not to mention its impact on our economy, with already messed-up supply chains.
More Truckers Than Ever
But today, more than 18 months later, Axios’ Emily Peck asks, what trucker shortage?
She writes that employers have managed to find and hire over 115,000 new truckers since the depths of the pandemic in 2020.
At the height of the supply chain crisis, which is still ongoing, transportation companies pointed to a shortage of truckers as a contributing factor.
Truckers and their advocates were quick to point out that low pay, poor working conditions and high turnover were driving the growing problem.
Now, Peck says the shortage is getting better, even possibly over – pointing to a report from transportation market research group ACT, which notes, "The driver supply flipped from shortage to surplus in early 2022."
The surge in hiring, according to Peck, comes as big wage increases and demand for trucks to deliver all the goods we've been buying are bringing loads of new drivers to the profession.
Plus, she adds, some of the health constraints of the pandemic have begun to fade away.
Now that federal stimulus checks are a thing of the past and prices are surging, driving a truck – in an industry with wage growth that’s outpacing inflation – looks unusually appealing.
Andrzej Tomczyk of too big to fail Goldman Sachs said employers "have been trying to hire like crazy ever since the pandemic-induced demand surge led to relative capacity constraints in the industry. So, it’s likely a reflection of some catch-up coming online."
Over 20,000 more long-haul truckers got jobs in May, the largest monthly addition of new truckers since 1997 – when the Bureau of Labor Statistics started tracking.
In fact, long-haul trucking employment is now 2% above pre-pandemic levels. And average weekly earnings were about 11% higher in May, compared to a year ago, for drivers in freight trucking.
According to BLS, the average weekly earnings of truck drivers have increased about 33% from January 2018 to May 2022, to $1,215 – which equates to $63,000 a year.
Many veteran and independent long-haul drivers earn a lot more. Recently, more drivers have bought their own truck and, according to Peck, are taking advantage of surging "spot prices" (live market rates) for hauling.
"A lot of people who wouldn't normally be a truck driver" became truck drivers, observed Kenny Vieth, president of ACT.
As the chart above shows, there are now a new millennium high of 1.1 million general freight truck drivers – up 28% from about 860,000 at the depths of the Great Recession.
Courtenay Brown and Neil Irwin have been spot-on with their analysis of the economy recently.
Yesterday, they wrote that the “strong labor market continues to be the economy's bright spot.”
They say it could stay robust even as the Fed sends the economy into a slowdown if, that is, “businesses hoard workers to avoid repeating past mistakes.”
Employers, particularly in industries that have struggled with labor shortages, may be more reluctant to lay people off, even as rising interest rates and other factors slow consumer and business demand.
Brown and Irwin believe if employers maintain their payrolls, it would make the coming “economic slowdown milder and less painful for workers than recent recessions.”
They point to recent company earnings calls, where some employers have reported hesitancy to reduce their headcounts, even as growth deteriorates.
Government quarterly reports show that GDP has shrunk a cumulative 2.5% in the first half of 2022.
Chris Gorman, CEO of bank holding firm KeyCorp, said, "It's been challenging, frankly, to be out in the hiring market in this ride-up in the last couple of years."
That's why he says his company will staff up more in some areas "in sort of a flat or down" environment than they have in the past.
In June, only 1.3 million workers were laid off, fired or otherwise released from their jobs, according to the Labor Department.
That’s down 28% from the average of 1.8 million in 2019 (i.e., before the pandemic) – suggesting that companies are indeed more reluctant now than they were then.
Another day, another drama, another slew of confusing data flowing out of government agencies.
The U.S. economy has created over 3 million jobs so far this year.
The number of people working as of July exceeded the total seen in February 2020, just before the economy dipped into recession, at least according to the National Bureau of Economic Research.
But it looks like the hiring binge could be winding down. In fact, many companies are now planning to cut back, largely because of the Fed’s rate hiking campaign and Quantitative Tightening to rein-in high inflation.
A new PwC survey shows that 50% of companies are planning to reduce their overall headcount.
Additionally, 46% of companies said they’re ending or reducing signing bonuses, while 44% are rescinding offers (my daughter was a recent victim).
Myles Udland believes that reducing overall headcount doesn't mean all of the respondents to PwC's survey are planning layoffs but indicates plans similar to what’s been going in tech.
As the report says: "Respondents are also taking proactive steps to streamline the workforce and establish the appropriate mix of worker skills for the future.”
That should come as no surprise. After a fury of hiring and a tight labor market over the past two years, executives see the distinction between having people and having people with the right skills."
Or, as Steven Covey once put it, having the right people in the right seats on the bus.
Since the labor market bottomed in April 2020, more than 22 million jobs have been added – or in many cases, added back – to the economy.
Fed Chair Jerome Powell told reporters last month, the U.S. labor market is "very hot." And those comments came before the government’s July jobs report showed 528,000 jobs were created last month.
This robust rebound, however, has been far from evenly spread across industries.
The nonpartisan Committee for a Responsible Federal Budget reports that overall leisure & hospitality employment is still down over 1 million jobs from February 2020.
At the same time, industries like "professional & business services" – which covers a host of white collar, Zoom-based, remote jobs – are up almost a million jobs (986,000) from pre-pandemic levels.
Udland says this uneven industry-level recovery “is why it sometimes feels like ‘everyone’ has gotten a new job in the last year while no restaurant…is fully staffed these days.”
One of the economy’s many enigmas in 2022 has been “blockbuster jobs growth during a time of very low unemployment vs. complaints of a labor shortage,” according to Courtenay Brown and Neil Irwin.
They add that since earlier in the year, it’s seemed like something has had to give. Now, new evidence suggests that "something" may have arrived.
ADP, the nation's largest payroll processor, rolled out its new measure of private-sector payrolls on Wednesday.
In partnership with Stanford University’s Digital Economy Lab, the ADP Research Institute indicator infers data based on workers added or cut and paychecks sent by its own massive client base.
The other day, it showed private employers added 132,000 jobs in August — less than half from the 270,000 in July, and the lowest reading since January last year.
The newly designed ADP report aims to capture underlying employment trends compared to its older version that essentially represented little more than a prediction of what the BLS would report two days later.
Well…today’s job report shows that 318,000 jobs were added to private payrolls last month, the lowest gain since April 2021 and well below July's 526,000, but just slightly below economists' estimate of 318,000.
So Friday was jobs day. The “Non-Farm payroll report” it’s called. And as usual, when the headline hit, it seemed acceptable. Well that’s what the headline’s supposed to do, give you a quick hit of “good” so that you wander off thinking things are pretty good out there.
They said that overall, 261,000 jobs were created and that was better than the estimates. Even taking out any Government employment, it was still up 230K, better than they hoped.
But as usual in this day and age, the report was total crap. Lies and distortions of epic scope. First off let’s look at that headline number. Okay so 261K jobs were created. Or… were they? Uhm, NO. In fact our friends at the BLS sprinkled so much of their fairy dust on the report, it was unreadable. Let me explain.
The Bureau of Labor each month takes verified job numbers, and counts them. But they also figure “hey there are probably jobs out there that we didn’t get proof of yet, so we need to calculate them into the mix.” This is called the “Birth/Death” model.
You can go to the BLS website and read the mumbo jumbo about how they come up with these extra jobs, but it’s an exercise in futility. They’ll give you all these fancy equations and academic mental gymnastics, and it won’t make a lick of sense. Let me sum it up for you…
Basically what they’re saying is that for every “X” amount of businesses that close (that’s the death part) Some “X” amount of those now unemployed employees, will go out and open “X” amount of new businesses. Well new businesses need employees, so they take a random-assed guess about how many that comes to also.
CEO sentiment among the largest companies in the U.S. has fallen for the fourth straight quarter this year.
Yet, those economic jitters have not sent CEO confidence jumping out of their high-rise offices.
In fact, Axios’ Courtenay Brown and Neil Irwin say their hiring and capital spending plans “are more consistent with growth slowdown than outright economic contraction” (aka recession).
The latest CEO economic outlook index from the Business Roundtable fell by 11 points to 73, continuing the gradual but steady slide that began in early 2022.
A look back shows that it's the first time since the pandemic was declared in 2020 that the index has fallen below its long-run average of 84.
Brown and Irwin note, however, that the current level “reflects a soft patch, but not a full-blown U.S. recession, like the Eurozone crisis in 2012 and a period of global economic softening in late 2015.”
As the Federal Reserve converges on the nation’s capital this week for its last policymaking meeting of 2022, consumer inflation expectations are falling again.
According to the New York Fed’s latest Survey of Consumer Expectations, consumers expect a median inflation rate of 5.2% in the year ahead. That’s almost 0.75 percentage points lower than what they expected in October.
Over the next three years, consumers expect a median rate of 3% – a tenth of a percentage point lower than in October. And their median expectation over 5 years is slightly down at 2.3%.
The move downward reverses an increase in expectations shown in the prior month that, if unbroken, would certainly have given the Fed an excuse to continue with their 75 basis point rate hikes well into the new year.
The NYFed’s monthly survey is “a nationally representative, internet-based survey of a rotating panel of approximately 1,300 household heads.”
According to the NYFed, “Respondents participate in the panel for up to 12 months, with a roughly equal number rotating in and out of the panel each month.”
As it is, there’s no guarantee that Powell & Co. will step down their aggressive tightening on Wednesday with a presumed 50bp increase – although Fed Funds futures traders believe there’s 75% chance of that.
That would take rates to a range of 4.25%-4.50% – up from 0%-0.25% before the campaign to rein in non-transitory inflation began in March.
As Courtenay Brown and Neil Irwin point out, perception is usually reality – that is, if consumers believe high prices will stick around, they can (and usually do) become a reality; the same goes for expected lower inflation.
Turns out that October's jump now appears to have been a blip on the radar screen of an otherwise months-long downward trend of inflation expectations – consistent with rising prices at the gas pump.
Fortunately, for consumers, the cost of crude oil and gas has been falling since late spring/early summer and is now an average $3.26 a gallon across the country (it was $4.99 in mid-June), according to AAA.
Critics, second guessers and Monday morning quarterbacks are speaking out en masse since the Fed’s 50 basis point rate hike on Wednesday.
In perusing mainstream headlines and articles since then, I’ve found that 9.5 out of 10 of op-ed writers, economists and other pundits believe that Chair Jerome Powell and his policymaking colleagues are on the verge of sending the economy into a recession.
They say, no ifs, ands or buts about it. The only question is, How deep and prolonged will the downturn and resulting pain be? In other words, forget about any soft landing.
The consensus of the naysayers is that the Fed started their quantitative tightening too little, too late. This side also argues that:
(1) The Fed’s projection of last year’s inflation surge being transitory was naïve (at best) and potentially catastrophic (at worst); and
(2) As a result, they kept interest rates too low for too long and kept buying Treasuries and mortgage-backed securities when they should have stopped that much earlier.
The equities market is a very strange beast, it truly is. Let's take Friday for example.
The fed has been pretty straight forward in telling you that they are going to hike rates until they get up and over 5%. Despite the howls from the market participants, Powell has also said that there would be no rate cuts in 2023.
But Wall street doesn't believe him. See, they've got all this history about the Fed, and for decades the play was always the same. Fed hikes rates to cool down an economy, overshoots, panics and then starts cutting rates.
When rates are being cut, stocks move higher. Why? Companies can borrow more money at a cheaper price. They can use that money to buy up their own shares, and thus reduce the float and therefore push the stock price higher.
Wall street LOVES low rates and the evidence is easy to see. Look at what the DOW has done since 2010. After the 08/09 financial crisis, the fed went into panic mode and printed money like madmen. Do you know where the DOW was in 2010?
No, really.... think about this for a minute. The DOW Jones has been in existence since 1896. Did you know it was that old? Yessirree it is. And from 1896 all the way to 2010 the best it could do, was end the year at 10,600. That's it. 10K in over 100 years.
From 2010 to 2022 it made it to 34,561. Now the back of the cocktail napkin tells me that this is a gain of about 24,000 points.
So, if it took 114 years to go from its humble beginning of 12 stocks, to the current 30 stocks in 2010 and only gained 10K points... why did we gain 24K points in just 12 years? What changed?
You all know the answer to this riddle. Zero interest rates and trillions of freshly minted/printed dollars, that's what. If the fed is cutting rates, and/or keeping them there, AND printing trillions at the same time, the market gets orgasmic and up it goes. We have the proof, it's there in black and white.
But the fed has changed course now, and has been aggressively hiking rates. Well that's sort of peeing in their punchbowl and they hate it. That's why in 2022 we saw the S&P down 20% and the debt heavy NASDAQ down 34%.
Over the last several months, consumers’ expectations of future inflation have been steadily falling – a sign perhaps that Americans had confidence in the Fed's war on prices.
Courtenay Brown and Neil Irwin, who say that changed last month, pointed out today that for the first time in six months, median inflation expectations of everyday households in the year ahead rose.
They increased, in fact, by a half-percentage point to 4.7%, according to the New York Fed's latest Survey of Consumer Expectations.
The report comes as expectations for the level of price increases for everyday goods and services — like food, gas, rent and medical care — decreased in March.
After 2023's hotter-than-expected inflation reports, the March data suggest that the public now believes inflation won’t fall quite as much as they have been anticipating.
Brown and Irwin caution, however, that one month of new numbers doesn’t necessarily mean that “inflation expectations are becoming unanchored. But,” they add, “more readings of this kind could worry officials.
Median inflation expectations at the three-year-ahead horizon ticked up by 0.1%, to 2.8%, but they fell slightly (by 0.1 percentage point) to 2.5% at the five-year-look-ahead timeframe.
Consumers also pushed up expectations for household income growth and, for the first time since last fall, how much they plan to spend.
Mean unemployment expectations — or the mean probability that the unemployment rate will be higher one year from now — increased by 1.3 percentage point to 40.7%.
The average perceived probability of losing one’s job in the next 12 months decreased by 0.4 percentage point to 11.4%. But the average probability of voluntarily leaving one’s job declines by 1.5 percentage points to 19.3%.
They warned, too, that it was getting harder to get a loan – a point Brown and Irwin say is worth watching in the wake of the recent bank failures and bailouts.
The share of households reporting that it was more difficult to access credit compared to one year ago rose to the highest level in the survey's 10-year history.
Notably, year-ahead expectations about households’ financial situations also improved – with fewer expecting to be worse off and more respondents expecting to be better off a year from now.