Epic battles are taking shape

Tariffs are starting to bite—but leaders are by and large managing their way through the pain. Economists expect growth will slow in the second half—but with Q3 nowcasts still comfortably above 2%, a recession still seems quite far off. And warnings about an AI investment bubble are growing louder—but we still have barely scratched the surface of the benefits it’ll bring. It’s starting to look like the next 18 months are shaping up to be an epic battle of several opposing forces.

— Geert De Lombaerde

 
• Survey: Tariffs have caused double-digit operating cost hikes at nearly half of companies

• A veteran banker talks preserving profits, reasonable optimism and a ‘vast improvement’ in leadership
 

Failure isn’t fatal

This opaque economic environment is a good time to entertain the idea of doing some new things and setting yourself apart. Maybe listen for what customers aren’t saying to dig up new opportunities. Or get to grips with that technology project you’ve been putting off since the chaos of the pandemic. Progress made during these hazy times could pay off double once growth returns in force.

• ‘Unless failure is an option, you will never be able to optimize what’s available to you’

• How Toyota and other lean cultures lead with AI
 

“Equipment we can buy;
qualified employees is the problem.”

From a respondent to Plastics Machinery & Manufacturing’s survey
about reshoring capacity. We’ve quickly returned from the 
wage spikes of The Great Resignation to more fundamental
labor supply problems. The Trump team’s immigration
priorities have made finding skilled labor
even trickier than before in many industries.

• PMM poll: Two-thirds of processors have capacity available
 

Laws of labor

Back to AI for a second: Sam Altman’s admission a few days ago that OpenAI “totally screwed up” the launch of its GPT-5 service speaks to the idea that’s it’s still early days for this technology. Another data point, courtesy of an MIT report: 95% of companies using generative AI are seeing zero return on their investments. It’s still very early days—and high time to refine your focus on human capital.

• The skills gap is widening as AI adoption reaches 50% of the workforce

• Hiring in the age of tariffs: Manufacturing leaders sound off

• Finding new ways to promote employee longevity
 

2.4%

The Q1-to-Q2 increase in the U.S. Bank National Shipments Index

The good news: That was the transportation index’s first sequential gain in three years and its largest in four years. The bad news: Q2’s reading was still down 9.8% year over year and a Truckstop survey of smaller fleets shows optimism waning. The contrarian take: Trucking just might be ready to start climbing a wall of worry.

• The for-hire trucking market today: Less optimism and modest freight growth
 

What we’ll be watching

It won’t be long until we’re talking in earnest about 2026 budgets and forecasts. For the next few weeks, I’ll be looking and listening for indications as to how C-suites are framing those figures. Tariffs continue to cloud the picture but the time to make tough decisions is quickly drawing near.