The GM strike is currently the longest nationwide autoworker walkout since the ‘70s, with roughly 50,000 UAW members participating across the country. As labor contract negotiations continue, some analysts predict that a protracted strike could have the potential to affect a number of key economic indicators, including GDP.
“If the strike lasts through the end of the year it will reduce fourth-quarter GDP by 0.2 of a percentage point,” Moody’s said in a research note, as reported by Newsweek. “If the strike extends into next year, then the economic damage could become more significant.”
The prediction is backed by comments made by The Econoclast principal, Michael Cosgrove. In an interview with Newsweek, Cosgrove said: “If the strike did last two or three months, one could expect fourth quarter real GDP growth to slow from two percent to perhaps 1.8 percent.”
The GM strike went into effect September 14th following the expiration of the UAW’s previous contract with General Motors. As such, it won’t affect September payrolls numbers, but if the walkout continues until the week ending October 12th, it will show in the October numbers.
Unemployment claims may also rise, as even though striking workers are ineligible for benefits, some still file for them. What’s more, companies that depend on GM for sales will contribute to a jobs data hit as well.
Other affected indicators include production data.
On the dealer side, Newseek also reports that despite a 77-day inventory shored up prior to the GM strike, sales and supply chain disruptions are expected if the walkout lasts more than two weeks. What’s more, analysts assert that GM could lose customers as a result.
“A week or two isn’t a big deal, but a strike lasting longer than a month is where GM starts to lose larger amounts of sales,” said chief investment strategist at BMO Wealth Management, Yung-Ya Ma. “That’s probably also around the time the difficulties increase more for those on strike. If the strike drags on, you can expect competitors to roll out promotions and advertising campaigns to take market share.”
The report highlights just how vast and interconnected the auto industry truly is. Clearly, the GM strike affects far more than just GM and its workers.
Luckily, recent reports indicate that progress has been made, with top bargainers taking over in contract negotiations. As always, we’ll continue to cover the GM strike as it develops, so subscribe to GM Authority for more GM-related UAW news and around-the-clock GM news coverage.