Tariff Concerns Hit Major Industries, Quiet Cracking Expands, Slow Roll the AI

Hey everybody, it's Gene Marks and welcome to this week's episode of the Paychex THRIVE Week in Review. This is where we take a few items out of the news that affect our small businesses. We talk a little bit about them, right? So, let's get to it. 

Obviously, the big news this week is tariffs, tariffs, tariffs. It continues to be big news, and in the news, we are starting to see the repercussions of some of the tariff moves and announcements that the presidential administration has been recently making. 

Tariff fears and fallout has hit the contractor confidence of builders around the country. This is according to constructiondive.com. Over 40 percent of contractors anticipate a slowdown in profit margins in the next six months, according to the Association of Builders and Contractors. Although their backlog improved their confidence has still dropped in March because of their tariff related concerns. About 80% of contractors said suppliers had notified them of tariff-related materials increases while 20% had projects paused or interrupted because of tariffs during March. 

In addition to that, in the auto industry, U.S. vehicles supply is falling amid tariff concerns, as well. According to CNBC, supplies of new and used vehicles for sale are declining rapidly as consumers flock to stores ahead of potential price increases due to tariffs. The day's supply of new vehicles calculated by an estimated daily retail sales dropped from 91 days at the beginning of March to 70 days just this past month. There's concern that the sales could come to a grinding halt once automakers and dealers sell out of their tariff-free inventories. 

And finally on the home buying side, a lot of home buyers are rushing to riskier loans because of tariff turmoil. Their fear is that it is pushing interest rates higher and so therefore they are settling and getting mortgage rates that are a little bit riskier. Again, this is according to CNBC, the share of borrowers applying for adjustable-rate loans jumped to the highest in over two years. Mortgage rates have jumped 20 basis points in one week. Homebuyers have pulled back despite much higher inventory of homes for sale. 

So, what do we do about tariffs as business owners? I just came from a meeting in San Diego of a lot of companies that are in the auto collision business that refinish autos and deal with collision, know, repairing cars, and they are being hit by increases from all of their suppliers of the materials that they use. 

Some people just are passing along the price to customers, others are taking other measures. It's a whole other conversation that we can have – and we will have – on a future episode of this podcast, but I will tell you this much, I do believe that a lot of the tariff negotiations going on now with many other countries around the world will resolve themselves within the next couple of months and most likely in favor of the U.S. 

What I do have concerns about is China. If you or customers or suppliers are reliant on goods from China, I still think that that is going to be a long-term negotiation to figure out what's right, and because of that, I think you need to be making preparations. 

Whether or not all the rest of the tariffs will sort themselves out, I think they will, but we're certainly seeing a lot of turmoil in the markets and as you can see in the construction, home buying and vehicle industry right now. So, obviously we're going to have to deal with this uncertainty.

The next bit of news comes from the HR Digest, and it talks about quiet cracking. What exactly is quiet cracking? Well, guess what? It's on the rise. According to a 2025 study, 54% of American workers have experienced some sort of quiet cracking in the workplace. 

So, what is that? Quiet cracking refers to a persistent sense of dissatisfaction in the workplace that leads to disengagement, poor performance, and an increased desire to quit. It means over half of the American workforce is grappling with dissatisfaction and an increased uncertainty about their future. 

Unlike burnout, quiet cracking doesn't always stem from exhaustion. It doesn't immediately show up in performance metrics, according to the study. Instead, it's a gradual erosion of happiness at work that is often unnoticed until it's too late. The study also highlighted that 68% of employees feel less likely to feel valued and recognized at work. 

So, quiet cracking, the new trend. Are you aware of this? Are you sure that your employees are happy or not becoming dissatisfied with their jobs? 

It's important to make sure you're doing consistent performance reviews and that you're checking in with your employees and you're holding different events like barbecues or picnics or sporting events for you to build team building and a culture in your company and just keeping an eye out to make sure that your people are doing okay and not suffering from quiet cracking. 

Finally, we have some tech news. We all know that the onslaught of artificial intelligence has really taken over technology and is a lot of small businesses are doing things with artificial intelligence. But a new report comes out – and this report is from Computer World – reports that analysts are telling their clients to go slow on their AI rollouts. 

The last few months have seen an explosion of new agents that can automate workflows within productivity applications, but analysts are recommending that enterprises carefully assess the deployment risks before adopting them. 

Enterprise leaders need to come up with a strategy for thinking about agents and AI in its true sense, and also governance of these solutions. That is an analyst on the Forrester company. The analyst said these tools aren't truly agents, but agents-like, which is how they're terming these applications right now. 

“Agent-ish solutions can solve point problems, but they aren't the digital co-workers that vendors are talking about, at least not yet. Google and Microsoft have been developing AI plugins for their productivity suites, and third parties are providing their own AI plugins for these applications.”

But again, analysts are warning, hey, roll these technologies out slow, and I could not agree more. As somebody who implements software at our clients, we see all the new AI tools that are coming out, particularly from Google, Microsoft, Salesforce, and others. Lots of potential, lots of great technology for improving productivity and profits in the future. But right now, they're still very, very early days and immature. 

So, you should definitely get familiar with them and practice with them and get to know some of these agents, play with them in safe surroundings, but give it some time. Come up with some governance as to who can use these agents, why they should be used, where they can be used, and also roll them out very slowly. 

They will get better as time goes on, but I wouldn't go full steamboat right now, and as you can tell, the analysts at Forrester also agree.

My name is Gene Marks, and you have been watching or listening to this week's episode of the Paychex THRIVE Week in Review. If you need any help or advice running your business, by all means, please sign up for the Paychex Thrive newsletter. Go to paychex.com/thrive and you'll get all the help that you need, as well as prior episodes of this podcast. 

Thanks for watching or listening. Hope you enjoyed and got some good information. We'll be back with you next week with some more news items that impact your business and a little discussion around those items. We'll talk to you then. See you.

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I'm your host, Gene Marks, and thanks for joining us.

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