Uncertainty – January 28, 2026

Before getting to the core questions, we can set the stage by offering this as a conversation of many to come about the all important economy that tends to usually be in the news. Expect multiple subjects to collide on this one, but with the common theme of uncertainty.

There is a commonly accepted principle, may even go so far as to say rule, in not just the academia of economics but it also happens to be rather bipartisan in acceptance, that the biggest headwinds to economic growth and activity is uncertain future conditions.

That of course can mean many things, this conversation aims to tackle a few of them. Some subjects right from the headlines, some from observance, and a real concern about what we are not being told.

• Opening question, why is the economy slowing down?
• Okay, supplemental question, is the economy slowing down?

In all fairness the numbers suggest a set of mixed signals from late 2025 into early 2026 but we are already seeing the impact of reduced hiring and a slowing labor market. From a perspective of Gross Domestic Product (GDP) the good news is for now Consumer Spending remains resilient and Business Investment is not entirely in retreat just yet.

We will elaborate on what that means, and why GDP is in focus.

That said, the not good news is that across the board we are seeing round after round of layoffs from arguably the headline grabbing major employers out there. Some combination of economic headwinds from an uncertain outcome for the coming year, and seeing realized planning for a reduced workforce set in motion a long way back for other reasons. A few are noted below with some numbers from various headlines.

• UPS is cutting 30,000 jobs for 2026, added to the 34,000 cut in 2025
• Amazon just recently announced 16,000
• Verizon already started cutting up to 13,000 in 2025, looking to another 15,000 this year
• Chevron wants 9,000 cut global by the end of 2026
• Accenture axed up to 11,000 last year
• Even Microsoft is looking to 3% or just shy of 7,000 jobs, started last May, then in July upped the target adding 9,000 more
• HP, Meta, Salesforce, Oracle, Nvidia, etc. all in the mix for layoffs.
• The US Government itself, as many as 322,000 jobs parted with (but I’ll admit those numbers are all over the place by source.)

Some saying the layoffs are for more general concern and restructure, others have their own industry specific or core business reasons, some dreadful combination of the two, but in all too easy to argue everything from Technology to Logistics, Healthcare to Government is parting ways with some percentage of their workforce. All within the last 1 year give or take.

So, why is this happening?

Our economy is complex, to say the least. Reasons for movement boil down to major factors colliding with normal economic cycles, but there is a real argument forming on the two biggest influences we see playing out today being uncertainty caused by the Federal Government itself and technology advances set in motion back around 2022 (actually much further back, but that is not as important for this conversation.)

Let’s start with the Federal Government and their addition to uncertainty.

Unless you’ve been in serious hibernation the dominant impact has been from the Trump Administration multiple-direct and ever changing tariff dispute with just about every trading partner we have on the planet.

Some of our closest allies may not entirely trust this government, let alone like many of us because of it.

What is a tariff? (And answer what tariffs are not.)

Despite the political hype, from both left and right politicians down to their supporting commentary, a tariff is literally and nothing more than an import tax. Paid by the importer, at the point of import, for goods coming into the nation, and paid to the Federal Government.

There may be dispute on how much authority there is for a President or Congress to be primary in tariff-making power, a dispute on the wording of the Constitution against several Acts over the years that “delegated” that power to a President for one reason or another, but on paper the purpose of a tariff is domestic protectionism.

No matter how the tariff ends up becoming so, the Department of Commerce translates the tariff policy into specific rates and applicationa based on trade conditions. Just an example for the purposes of this discussion, “Steel Articles” from the UK arriving in the US have a 25% tariff applied if the product originated (produced) in the UK but a 50% tariff if it “passed-through” the UK meaning the product was made, in part or whole, in some other nation before the UK shipped that product to the US.

After that, the Customs and Border Protection Agency is responsible for applying, or enforcing, the tariff. Their agents are at the 328, or something, “ports of entry” into the US where they identify, bill (or invoice,) and then collect tariff payments from the importer before those products leave those ports of entry. (That last part is disputable, deals and processes, but that is what is on paper.)

All tariff tax collected, every single penny, is deposited into the Treasury’s General Fund. Which is where just about all taxes or fees paid to the Federal Government ends up, and it is the Fund that is source for all payments for all government operations and spending.

Look at the General Fund as a collection of many accounts in the bank sense, more or less agency level but not that concrete. They are reconciled on a monthly basis and subject to all sorts of independent audits, and reporting on condition to Congress and the Office of Management and Budget. Quarterly they are certified, sometimes “corrected.”

What is the purpose of a tariff?

If you asked an economist that question you would likely get an answer that involves protecting domestic industries, those that produce goods for whatever reason(s) result in a higher price to market than from competition from a foreign nation. The idea being a national level safeguard of domestic produced goods and that in turn protects business, economies, jobs, etc.

Way back tariffs were also about a source of government income, and I am talking history here when why a government taxes its citizens is not quite apples-to-apples to why it happens today. Another conversation for another time.

And on that point the purpose of a tariff shifted from revenue generation to leverage in foreign policy as the modern application. The ability to pressure nations deemed engaging in “unfair trade practices,” or more commonly engage in bargaining among nations to agree on structured Trade Agreements. Does not matter if the Trade Agreement includes the word “free,” they are not, they are all terms and conditions style agreements.

If you asked a politician the very same question you may end up with some combination of the above, or even higher ambitions like “move production back to the US.” Or something, social media level thinking at best. Keep that point in mind, we will expand on that later.

What does a tariff end up doing?

That, sadly, is up for debate… even though it should not be.

Just about all economists not working for the Trump Administration, and not working for supporting political commentary either, will tell you that tariffs in the modern era are inflationary pressures on the products we buy.

Most economists also that the consumer ends up with the bill, sometimes referred to as a “pass-through” cost, where the importer hands that increase to their own costs down the chain to preserve margins. Matters not if the product imported goes right to a shelf somewhere, or is a source product in the production of some other end product, there is little consensus that the importer absorbs any of the tariff cost.

It may happen on a temporary basis but eventually the bottom line is impacted, so ask yourself, how often does a business or corporation agree to long term profit cuts? Hold that thought.

It is estimated, and again sources vary, that anywhere from 90% to as much as 96% of tariff costs end up passed on to the consumer. In terms of 2025 the realized impact means that households lost anywhere from $2,500 to nearly $4,800 in annual purchasing power. In one year, that is how much spending power was lost.

What we have very little consensus on, very little data to support, is that the exporting nations pay any of these tariffs.

Worse, all of this became a regressive tax on the US consumer.

The impact on producers in this nation is mixed simply because not every business, not every sector of our economy, imports products the same way and to the same ends.

For example, if a company produces steel domestically and tariffs are applied to imports of steel then it becomes a potential protectionary move by raising their own domestic prices to align to the tariff resulting price. Immediate costs handed downstream, as that increase is now the market price.

The other example is for someone importing steel with new tariffs to pay. In that case there is no choice but to pass that new cost down the chain, even at the risk of lower sales because the consequence is less profit, resulting less innovation, less credit worthiness, less incentive to risk expansion, etc.

Perhaps worse than all of that, production for many of these things does not change source location, or manufacture, that quickly. Resulting in erratic supply chains, also inflationary. And thanks to consistently changing tariffs we see consistent searching for suppliers. Contractual obligations notwithstanding, some of these items are commodity exchanged on closing schedules. If you check the futures on some of these things you will find anything but certainty, or for that matter stability.

Not the certainty the economy and the general markets like to see.

The bigger issue, and entirely contrary to the political selling pitch for tariffs, we have already seen realized that over 2025 it is estimated US Manufacturing Jobs ended up losing anywhere from 68,000 to 72,000 jobs. The last 8 months of 2025 saw consecutive manufacturing employment losses, ironically and somewhat aligning to “Liberation Day” as declared by the Trump Administration.

Go ahead and ask, I know you are thinking it, then why in the hell did we do this?

Before directly answering that first let us go a bit deeper, relying on the technical level and touch on several economic realities for this nation. Start with what Gross Domestic Product (GDP) is, happens to be a math formula.

GDP = C + I + G + NE

And before you ask, the point of knowing GDP is that number is essential in knowing the size and output of the economy for the purpose of trends. Not really about health at any one point in time, more about how we are doing quarter to quarter, and normalized to year to year. Growth is a good thing, but the trend over time shows stability.

Anyway…

C is Consumption: Private consumption expenditures by people and households (generally speaking) for what we all buy. Just about everything falls into this category like rent, utilities, food, electronics, going to the movies, getting a haircut, the next annoying toy that makes all the noise, etc. Buy it, consume or use it, then repeat.

I is Investment: Usually defined as Business Investment, but it is really expenditures by business and households on physical assets that increase the productive capacity of the economy. Not the same as Consumption. Think businesses buying machines or equipment, building offices or factories, and also research and development. Also think of people buying new homes (does not include buying and selling existing homes.) Economic expanding purchases fall into this category.

G is Government Spending: This is the government buying “final goods and services” that can be anything from salary to government employees, new Tanks or Jets, filling up Air Force One, buying a box of pens, something else Gold for the Oval Office, whatever else. The things they buy.

NE is Net Exports: It is the difference between the total value of goods and services produced domestically and exported, minus the total value of goods and services imported from produced outside the nation. In the case of the US that is usually a negative number.

If you asked when was the last year the US had a trade surplus (more goods and services left the nation than we imported in so a positive net export number) the answer is 1975. The US is a net importer, and has been for decades now. Nothing new, nothing surprising, don’t let anyone tell you otherwise. On that note, we should discuss the US economic model for a moment.

Since you now know the US for the past 50+ years has been a net importer of goods and services and you know how GDP is calculated, the natural question is what is the US economic model?

It is a rather easy answer.

Using 2025 numbers, again likely to be adjusted here and there, the Consumption (C) part from the above accounts for roughly 68% to 69% of GDP. Some years it touches 70%. We are a consumer consumption driven economic model and have been going back to just post World War II (at roughly 62% back then.) Over the decades that number has inched upwards to what we see today, and in the modern era each year is generally consistent and within these numbers.

For the purpose of comparison, and to make a point, average all the EU nations and you’ll see their Consumption part of GDP as more like 52% to 53%, and China is around 39% to 40%.

You are seeing that right. China holds the top ranking world-wide for trade surplus, and that is a factor into why their economic model is production based whereas the US (and most western modern nations) is consumption based.

A sidenote, from the above, on the intention for the Trump Administration to trade war with China and bring manufacturing home. Not only is manufacturing is not coming back anytime soon, it was reported recently that China for 2025 broke their own trade surplus record at some $1.19 Trillion.

That question, why did this happen, just got more messy.

Where does AI come into all this?

Rather strongly if we are being honest.

A little history. The subject of AI and development of it is not new, but we have entered an era very recently of more generative AI models. Meaning, we left the era of virtual assistants and responses based on algorithms, and entered an evolutionary step that takes analyzing and classifying by adding in learning and generation of output from it.

A very long conversation cut short, the idea of predicting what comes next by processing massive amounts of data of all structures for patterns and relationships, associations of those structures, to generate improvisation style responses.

We already know various AI tools can generate essays for kids sending teachers over the edge, and assist with emails or scripts used by people in the engagement of business. But now they can also formulate images and videos, actually compose music, crank out complex code in most development languages, produce data and metadata sets, generate and calculate complex engineering and scientific formulas, and in some cases assist in modeling and design of complex molecular structures for research and pharmaceutical applications.

Each day this list gets bigger. Sounds wonderful, but there is a catch. Several actually, but we’ll focus on one for this conversation on uncertainty.

Impact to human labor.

Before everyone freaks out, historically speaking the workforce has already been through several evolutions of work environment impact from technology across all of US history.

For instance, GM back in 1961 decided to go with their first industrial robotic application on the assembly line and it did not take long for the entire automotive industry to see robotics and manufacturing automations become the literal backbone for how all modern cars all over the world are produced and assembled today.

All the motivations were there at the time. Increased productivity from machines repeating a task faster and for longer than human labor could, and over a duration of time at less cost but with efficiency gains.

The impact, the automotive industry overall needs anywhere from 14% to 18% less workforce than it did prior to this move GM initiated. From a plant level efficiency gain perspective that number shoots up to over 38% in the number of employees needed today compared to then for roughly the same process. Certain tasks like welding, raw materials cutting and pressing, painting, and a few others are seeing virtually 100% of human labor cut and in place precision machinery to do the same work. Again, with all the benefits in terms of business model cost improvements.

Go back even further into history and you’ll see plenty of industries and types of work entirely eliminated by robotics, automations, technology, and various advancements. Phone company switch board operators, elevator operators, film processing technicians, the guys that ran around with oil based products and filled up street lamps.

The point being technology continuously improves, seeing impact to the supply and demand for specific labor is not new. What may be new is the severity of impact from AI.

Any number of job types could be in the crosshairs, and for similar motivations. Improvement in efficiency at reduced costs, longer periods of sustained productivity with near removal of the human error factor.

As hinted above. Basic data entry and organization jobs up to senior level complex software developers and data architects will see reductions in how many are needed to work alongside AI technology. Far more than half, not quite all at risk.

The improvement from virtual assistants to engaging and never needing to rest AI driven virtual chat bots on a long enough timeline will render human customer support and relationship support agents to difficult condition needs only, in the high 90% or more range could be gone and very soon.

Technical writers and junior to mid level accounting could all be handled by AI technology and it very well may replace annoying human telemarketers with AI generative chat capable technology that could respond to objections and be even more of a challenge to ignore.

There will be far more added to that list the further we go.

We’ve all seen a few humorous social media clips of autonomous cars making a wrong turn and literally crashing into a crime scene. Well, those are based on AI applications. If you apply some critical thought, assume AI improvements, there will be more AI driven mechanisms to move products from point to point. On a long enough timeline quite a few people are going to have to do something else.

Not all inclusive of course but to illustrate this, in just the US, Uber and Door Dash have some 2 million, give or take, driving each day. Moving people and products. Add in roughly 100,000 for UPS, about the same number for FedEx, shy of 500,000 for Amazon, and even USPS has 240,000 out there city to rural doing delivery of things to our doors. Several companies are in competition developing mechanisms to replace a significant percentage of those people.

Dare I ask about commercial truck drivers? Quite a few of those too.

This is not intended to be a sky is falling time to panic narrative, just the reality that there has always been interest of business in getting the most out of labor even if it means using technology to require less people. For this conversation the point is the so-called “AI Boom” is likely to have a continual and significant impact on the workforce, already happening at companies on the layoff list.

Are they all going to the unemployment lines tomorrow? Of course not, these things take time to see through and odds are it will take years for complex AI and improved technology to take over significant percentages of these jobs people are doing today. Like moving products from point to point, but some will start soon enough.

This all adds to uncertainty, in this case based on not knowing how people earn wage in a changing job market, gradually over time as AI displaces them.

At some point someone will have to consider how less workers still participate in our consumer spending economy. According to several sources, our national Labor Force Participation Rate is at 62.4%, down from 2010 at 64.4%, and well off the modern era peak of 67.2% in 2000. The pandemic years is explainable, but the trend in the past 25 years is concerning.

So ask yourself, who are the winners in all this?

Just the above conversation explains well why over 130 new “hyperscale” datacenters went online just in 2025 as a “once in a generation” growth of an industry that is the very backbone for AI technology. For all sizes of data centers there are more under construction now than already exist, and it is in the thousands.

That is all happening for a reason.

One possible conclusion

Political optics may be the answer.

We can likely all agree that the 2024 Presidential Campaign Season was one for the books, with a whole lot of drama mixed with the usual promises of glorious results for us all if elected.

One of those promises was from Trump, of a “manufacturing renaissance.” That if he were elected the nation would become an “unrivaled manufacturing superpower of the world.”

Sounds nice, too bad all the numbers for that goal are going in the exact opposite direction, yet we have no reason to conclude the message from the Trump Administration will change.

Between tariffs increasing revenues to the Federal Government and things like the One Big Beautiful Bill taking away so many facets of support for the most economically vulnerable it is reasonable to ask who really benefitted from this trade war so far. It does not appear to be us, the people, the working class.

We will have a conversation later about Fiscal Policy from Congress, Trade Policy from the Trump Administration, and Monetary Policy from The Federal Reserve seemingly on different pages and damn near adversarial to one another.

Another possible conclusion

To start this train of thought, as matter of universally accepted economic principle, it is near impossible to have one change in the economy and expect all other factors to remain constant. Said another way, influential alterations to the economy (like tariffs) tend to have a ripple effect across the entire system. That is of course subject to severity but it brings us to a point of consideration.

So, perhaps instead of this being about manufacturing returning it may be about leverage.

Instability has already been discussed.

Economists sometimes refer to a Latin term, Ceteris Paribus, and that sort of translates to “all else being equal.” (It really does not quite translate to that but play along.)

In practice where economists are looking for answers it is a principle of holding certain factors at a constant in order to isolate the effect of influential changes on the economy. The elites out there will argue about correlation against causation, may even nitpick on these terms, but the idea is to close the gap between textbook economic principles against real world and evolving complexity.

How that applies here is considering that if manufacturing does not, or takes too long to, come back in a meaningful way then what is the lasting impact of tariffs? Other than an artificial inflationary effect on what we buy.

So in this case leverage means influencing winners and losers.

We hinted at it above. Domestic producers of steel already benefit from tariffs placed on imported steel, but not in the protection of price sense but in the price increase sense. All too easy to argue that the Trump Administration has gone with arbitrary, and changing, tariffs meaning the tariff costs put imported steel as more costly than domestic production. Easy decision, raise prices on domestic produced steel to match the tariff. New profit made, courtesy of the Trump Administration.

Cleveland-Cliffs Inc. in one year has seen their stock price go up over 38% and Nucor Corp has seen their stock go up a similar 37%. Until the most recent quarter both saw Revenue and Earnings beat expectations (Q4 2025 seems to be an issue, but does not change the story.) Tariffs on steel for those.

Domestic oil and natural gas producers have seen results that compare, as tariffs on imported energy sources grant latitude to ExxonMobil and Chevron. And with that producers of plastic and end products containing plastics have also benefitted.

Speaking of datacenters, AI technology, and everything supporting every type of cryptocurrency known, we can say that in just the last year Intel stock is up 144%, AMD is up 120%, Nvidia up 48%, and Taiwan Semiconductor Manufacturing up near 70%. Arguably players in the AI space.

Not all are showing the same result, but there are clear winners, even if some had moderate valuation improvements like Microsoft and Oracle, but all are in a position to capitalize and some are on the list above of jobs being cut. Make that make sense if you will.

Plenty executives and leaders of these companies have been seen at the White House in the past year, plenty of them give to those in Congress too.

Oh yeah, and a few made contribution to the pending new White House Ballroom.

Who is the loser in all this?

We may have already answered that one too, the US consumer for sure and possibly the US worker too.

As we’ve discussed, a tariff is a tax and an applied cost that is most always passed down to the consumer. For Fiscal Year 2025 the US Government collected some $216.7 Billion (Fiscal Year being Oct 2024 to Sep 2025.) How this happens becomes regressive too. Why that term?

To compare, our system of income taxation is fundamentally progressive. All that means is the more you make the more the listed tax rate will increase, and there is ethical consideration for that. It comes down to several other economic principles to explain it. Ability to pay being the big one.

Real world examples. For a single filer earning $50,000 for the year before credits their base tax liability is $5,914. Again. give or take. Around of 12%, which is about 45% of the workforce at that income or less. (This is a bit misleading, things like deductions and so forth, this is for illustration.)

In an economy that $5,914 is more impactful to someone making $50,000 per year than it is to someone making $500,000 per year. For that person making $500,000 per year their listed tax liability is $135,164 or roughly 27% (again give or take.)

What is the point of all this?

In a progressive income tax system what is taken into account is the $5,914 to the person making $50,000 is more impactful to their economic behavior than the $135,164 is to that $500,000 earner. The why is the common basket of goods and services have the same price, or same unit price, and influences into what we pay from a business does not include our own incomes.

Example. When apples go up in price, the person making $50,000 per year likely has to make a choice that the person making $500,000 per year may not.

Taxation is the same way. When tariff costs are handed down to the end consumer we are all paying the same increase per unit cost for these common things, thus when the household costs for 2025 lost “between $2,500 to nearly $4,800 annual purchasing power” that impacts the person making $50,000 far more than the one making $500,000.

That makes tariffs regressive, the added revenue to the US Treasury hurt the lowest income earners the most. Winners and losers, and you may have that answer, at least in part, as to why Trump decided a trade war was the right call.

The US Treasury having new revenue means tax breaks can be handed out to those with the most tax liability to the government by existing tax code, the One Big Beautiful Bill altered that, and the efforts benefit those on the higher end of the earning spectrum than those on the low end.

One could argue, those that are most economically vulnerable in our economy just got the bill so that those of wealth have yet another lower tax liability consideration and perhaps better economic position.

Questions and considerations for all of us

My request is to consider where this train of thought is going, evaluate for yourself how you have felt in this economy lately. With still higher than target 2% inflation, no real end in sight for this multiple direction tariff fight, and seemingly monthly significant layoffs and job eliminations hitting the news.

Keep a few additions in mind as well.

Farming Operation bankruptcies in this nation are up 36% for 2025 over just the previous year, often associated with international trade risks and fluctuations. Also know that 2025 was the weakest year for job growth since the pandemic, and by some factors the worst since 2003. The number of jobs added in 2025 was far less than half of what was in 2024. We started off this conversation as to the jobs lost category with just a few examples adding up to significant numbers.

Now factor in the above part of the conversation on this AI boom, trade ware winners and losers, and you have possible answers to the notion that it “feels worse” because it very well may be worse.

The consumer being impacted by higher prices is one thing, being in close proximity to the next evolution of how we work and where work exists creates more uncertainty.

End on this, have we not answered enough questions to validate that the uncertainty is real?

It seems we have, and you be the judge of all the whys.