Kevin Warsh’s Fed Will End the War on Main Street and Trucking

Economic Conditions and Manufacturing - The ISM Manufacturing PMI recorded a reading of 47.9 in December 2025, marking the lowest level of the year, with new orders contracting for the fourth consecutive month and manufacturing jobs declining for 11 straight months [1][2] - The manufacturing sector experienced a record contraction streak, remaining in negative territory for 35 out of 38 months since the Federal Reserve began its tightening cycle [2] Labor Market and Wages - Driver wages in the trucking industry increased by only 2.4% in 2024, while inflation was reported at 2.9%, indicating that workers are falling behind economically [3] - The Federal Reserve's goal to "cool" the labor market was based on the Phillips Curve theory, which suggests that low unemployment leads to inflation due to increased wage demands [4] Federal Reserve Policies - The Federal Reserve raised interest rates 11 times from March 2022 to July 2023, increasing the federal funds rate to 5.25-5.50%, the highest since 2001, and maintained this peak for 14 months before the first cut in September 2024 [5] - Critics argue that the Fed's policies have disproportionately benefited Wall Street while harming Main Street, particularly small businesses and working Americans [6][20] Impact on Trucking Industry - The trucking industry has been severely affected by high mortgage rates, which peaked above 8% in October 2023, leading to a significant decline in housing starts and consequently reducing freight demand [9][10] - Carrier exits have been ongoing since Q4 2022, with a net decrease of approximately 40,000 for-hire carriers in 2023, reflecting a 50% year-over-year reduction [12] Economic Costs and Challenges - Non-fuel operating costs for trucking reached $1.779 per mile in 2024, the highest ever recorded, while combined driver wages and benefits were 90.7 cents per mile in 2023 [15] - Annual congestion costs to the trucking industry were documented at $108.8 billion, alongside $11 billion in lost revenue due to detention time, highlighting the economic strain on the industry [16][17] Future Outlook and Recovery - The Federal Reserve has cut rates six times since September 2024, bringing the federal funds rate down to 3.5-3.75% by January 2026, which may signal a potential recovery for the trucking industry [23] - Positive developments include significant reshoring and foreign direct investment announcements totaling $1.7 trillion through 2024, which could create new freight lanes and demand for trucking services [23][24] Industry Sentiment and Caution - The trucking industry remains cautious about capacity expansion due to past experiences of demand surges followed by crashes, which analysts refer to as "scarring" [25] - Kevin Warsh's nomination to the Federal Reserve is seen as a potential shift in economic policy that may address the challenges faced by the trucking industry and support a more balanced economic environment [26][27]