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Analysts Predict GM Strike Could Affect GDP, Economic Indicators

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.

Source: Newsweek

Jonathan is an automotive journalist based out of Southern California. He loves anything and everything on four wheels.

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Comments

  1. 2% gdp growth???? what happened to trump’s prediction of 4 or 6 fueled by the trillion dollar tax cut????

    Reply
  2. Democrats multi-trillion dollar spending is what happened.. if you ask anyone who knows, the US Government is collecting more money in taxes than ever before as the Federal government is spending too much; dump the Democrats.. in 2020 and elect Republicans who are willing to drain the swamp and cut Federal waste.

    Reply
    1. funny. trump has had a republican controlled congress for most of his presidency but don’t let the facts bother you.

      Reply
      1. It doesn’t really matter which party is elected, they will continue to increase the spending in either case.

        Reply
      2. You mean Democrats who run as Republican.

        Reply
    2. The impeachment will drain the swamp. Sooner than you think.

      Reply
  3. If GM had 42% of the market as they did in the heydays of the 1950-60’s, money would be no issue. Now they are barely holding on to 17%

    Reply
  4. Fake news economist have been begging for a recession for two years. It’s pathetic when someone wants others to suffer to prove your side right. Two years, no recession, this won’t be any different.

    Reply
  5. Looks like they all wanted a holiday any way and don’t need the money..

    Reply
    1. I’m starting to think that the only thing that will finally resolve the delusional thinking of the UAW is when the auto companies go completely out of business, taking all of those jobs away forever.

      Reply

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