Kevin Warsh doesn’t believe the Federal Reserve should sacrifice Main Street to save Wall Street.

That distinction matters more than most truckers realize. Because for the past three years, the opposite philosophy , that cooling the labor market by keeping credit expensive would somehow fix inflation , has been the guiding principle behind Fed policy. And trucking absorbed every bit of that pain.

In a Wall Street Journal op-ed published just weeks before his nomination, Warsh laid out his case against the current Fed approach. “Money on Wall Street is too easy, and credit on Main Street is too tight,” he wrote. The Fed’s “bloated balance sheet” had created conditions where big institutional players could access cheap money while small businesses and working Americans faced the squeeze.

If you’ve been watching freight rates collapse, carrier exits mount, and driver wages fall behind inflation, you already knew something was wrong. Now you know what to call it.

The Numbers

The Federal Reserve hiked interest rates 11 times between March 2022 and July 2023, pushing the federal funds rate from near zero to 5.25-5.50% , the highest level since 2001. The rate stayed at that peak for 14 months before the first cut came in September 2024.

The stated goal was to “cool” the labor market. Fed officials repeatedly cited “elevated wage pressures” as justification for keeping rates restrictive. The theory , based on something economists call the Phillips Curve , holds that low unemployment causes inflation because workers demand raises that companies pass on as higher prices.

There’s just one problem with that theory when applied to trucking: driver wages weren’t keeping up with inflation in the first place.

According to the American Transportation Research Institute’s 2025 Operational Costs report, driver wages increased just 2.4% in 2024. The Bureau of Labor Statistics reported inflation at 2.9% for the same period. That’s not wage-driven inflation. That’s workers falling behind while being blamed for economic conditions they didn’t create.

The Fed was fighting a phantom.

26 Months of Manufacturing Devastation

That’s how many consecutive months the ISM Manufacturing PMI spent in contraction territory, from November 2022 through December 2024. It was the longest manufacturing contraction streak on record. Through December 2025, the index remained in contraction for nine more months, bringing the total to 35 out of 38 months in negative territory since the Fed began its tightening cycle.

The December 2025 ISM reading came in at 47.9, the lowest of the year. New orders contracted for the fourth straight month. The employment sub-index showed manufacturing jobs declining for 11 consecutive months.

Manufacturing drives trucking. When factories run, trucks move raw materials in and finished goods out. When factories idle, trucks sit.

The Fed watched this happen. They kept rates elevated anyway.

According to ISM Chair Susan Spence, “For every positive panelist comment about new orders, 1.3 comments indicated concern about near-term demand, driven by tariff costs and other uncertainties.”

Tariffs weren’t the only factor crushing demand. Fed policy deliberately suppressed the economic activity that creates freight in the first place.

The Housing Domino

Want to understand why flatbed carriers got crushed? Follow the mortgage rates.

In January 2022, the average 30-year fixed mortgage rate sat at 3.22%. By October 2022, it had spiked to 7.08%. It peaked above 8% in October 2023, the highest level since 2000.

The Consumer Financial Protection Bureau documented the impact: monthly payments on a median-priced home increased $1,532, a 113% jump, between 2021 and 2023 when combining rate increases with rising home prices. Even as rates pulled back slightly, the increase remained at $1,040, or 77%, through late 2024.

Census Bureau data confirmed the carnage. Total housing starts fell from 1.56 million units in June 2022 to 1.36 million in 2024, a 3.9% year-over-year decline. Multifamily starts dropped 25% in 2024 alone.

Every house that doesn’t get built is lumber that doesn’t move. Drywall that doesn’t ship. Appliances that don’t leave the warehouse. Furniture that sits in a distribution center waiting for buyers who can’t afford mortgages.

The Congressional Budget Office acknowledged that “high mortgage rates restrain construction activity.” That’s a polite way of saying Fed policy deliberately suppressed one of trucking’s most freight-intensive sectors.

The Carrier Bloodbath

According to FTR Transportation Intelligence analysis, carrier exits have been ongoing since the fourth quarter of 2022. The net decrease in for-hire carriers totaled roughly 40,000 in 2023, before slowing to approximately 19,000 in 2024, still a 50% year-over-year reduction and representing continued attrition.

The market still has nearly 86,000 more for-hire trucking firms than it did before the pandemic, a 33% increase in the carrier population, according to FTR VP of Trucking Avery Vise. But that surge came during 2020-2022, when stimulus money flowed, and rates spiked. The correction that followed wasn’t a natural part of the market cycle. It was Fed-induced demand destruction that forced carriers to choose between operating at a loss and shutting down.

Morgan Stanley analysis noted that many carriers were “operating every mile at a loss.” That’s not a market correction. That’s policy-driven economic damage.

The Real Cost of “Cooling” the Economy

The American Transportation Research Institute’s data paints a comprehensive picture of an industry squeezed from every direction.

Non-fuel operating costs reached $1.779 per mile in 2024, the highest figure ATRI has ever recorded. Combined driver wages and benefits reached 90.7 cents per mile in 2023. Insurance premiums continued their relentless climb. Equipment costs stayed elevated.

Meanwhile, ATRI documented $108.8 billion in annual congestion costs to the trucking industry. That’s productivity lost to infrastructure failures that Washington refuses to address while it focuses on “cooling” the labor market.

Add detention time, 135.9 million hours annually, representing $11 billion in lost revenue, and you start to understand why trucking economics have become so brutal. Drivers sitting at docks don’t get paid. Carriers lose productivity. And the Fed’s solution was to raise interest rates, making credit more expensive so companies couldn’t invest in efficiency improvements.

The freight recession was policy.

**In Comes Warsh **

Kevin Warsh served as a Federal Reserve governor from 2006 through 2011, including during the 2008 financial crisis. At 35, he was the youngest appointment in Fed history. He’s worked with billionaire investor Stanley Druckenmiller and taught at Stanford Business School.

His recent statements suggest a fundamental break from the Powell Fed’s approach.

In his Wall Street Journal piece, Warsh called the Fed’s track record under Powell “one of unwise choices” and argued that “inflation is caused when government spends too much and prints too much.” He called for the Fed to shrink its balance sheet and lower interest rates “to support households and small and medium-sized businesses.”

That’s a direct challenge to the policy apparatus that created the freight recession.

Treasury Secretary Scott Bessent shares Warsh’s perspective. Both have argued that the Fed has effectively been “implementing fiscal policy” by picking winners and losers in the economy, with Wall Street consistently winning and Main Street consistently losing.

President Trump made the connection explicit. “If you announce good news,” he said in a recent cabinet meeting, “that means they’re going to raise interest rates because they want to kill it.”

The economic establishment dismisses this as populist rhetoric. The data supports it.

The Recovery Trucking Needs

Trucking’s recovery depends less on capacity exit than on demand return, demand returns when monetary policy stops deliberately suppressing it.

There are positive signs. The Fed has cut rates six times since September 2024, bringing the federal funds rate down to 3.5-3.75% by January 2026. The Reshoring Initiative documented $1.7 trillion in reshoring and foreign direct investment announcements through 2024, up from $933 billion in 2023. Some 244,000 manufacturing jobs were announced for domestic production.

John Deere is building excavators in North Carolina for the first time in 50 years. The Treasury Department noted that for the first time in 26 years, the United States produced more steel than Japan. First Solar is bringing domestic production to Alabama. Graphite processing is returning to New York for the first time in 70 years.

Every reshored factory creates freight lanes. Every new manufacturing plant needs trucks, but the industry has been burned before.

Carriers remember 2021 and 2022, when demand surged and new entrants flooded the market. They remember the crash that followed. The “scarring,” as analysts call it, will make fleet executives cautious about adding capacity even when the market tightens.

Craig Fuller noted that capacity recovery will be slow: “That scarring from the past few years is going to prevent banks and entrepreneurs and fleet executives from expansion.”

That caution might actually help. Slow, sustainable growth beats boom-bust cycles that destroy careers and businesses.

Kevin Warsh’s nomination is a signal that the economic framework that created three years of trucking devastation may finally be changing.

The wage-inflation myth crushed this industry. Driver wages fell behind inflation while the Fed claimed it was fighting wage-driven price increases. Manufacturing contracted for 26 consecutive months, a record slump. Housing starts collapsed under the weight of mortgage rates engineered in Washington.

None of that was necessary. None of it was based on sound economics. All of it fell hardest on the working Americans who move freight for a living.

Warsh’s Fed may not fix everything. Senate confirmation isn’t guaranteed , Republican Senator Thom Tillis has indicated he may oppose the nomination until a separate federal investigation is resolved.

Acknowledging that “money on Wall Street is too easy, and credit on Main Street is too tight,” that’s a start. For trucking, that acknowledgment is long overdue.