A possible rail strike could be the catalyst that sends the US economy into a full-blown recession, the American Chemistry Council warned, releasing an economic analysis of the impact on its and other industries on Wednesday.
“[Si una huelga dura un mes,] it would likely significantly dampen several leading economic indicators through the first half of 2023,” the ACC said in a statement accompanying the report.
The group, which represents chemical transporters, noted that a strike could cause the loss of 700,000 jobs in several industries, as well as a 4% rise in the producer price index (PPI), which translates to a 1% fall in US gross domestic product (GDP) and drain nearly $160,000 million from the economy.
According to the US Bureau of Labor Statistics, the PPI measures the average change over time in the selling prices domestic producers receive for their production.
If the strike continues for a month, PPI could rise 12% over the two months combined and GDP contract by 2%.
“A rail strike could throw the economy out of recovery mode and into recession,” ACC chief economist Martha Moore said in a press release. “A prolonged strike would have an exponential effect for each additional month and would drag the country into a potential recession much faster.”
According to the report, a rail strike could reduce production at ACC members’ facilities, as they typically don’t have more than four to five days of empty wagons or raw materials in stock. If facilities don’t receive the supplies they need after a week or so, they could be forced to close.
The ACC and other airlines have urged Congress to avoid a rail strike and recently sent a letter to majority and minority leaders in the US Senate and House of Representatives.
If a strike is imminent, the ACC says Congress should pass legislation enacting the terms of the labor contract, which the unions and the railroads agreed to in September.
Shippers’ groups are concerned about the possibility of a strike if members of the two largest railway unions – representing the locomotive drivers and crew – decide not to ratify their collective agreements with the railways. The results of their votes on approving a new deal will be announced on Monday.
Three other rail unions have already voted against ratifying their collective agreements and have returned to the negotiating table.
Sick leave policy could be one of the sticking points for these unions, although the railroads have publicly expressed reluctance, opting instead to hold such discussions outside of contract negotiations, as recommended by the board appointed by the US President in attendance over the summer to break the deadlock in the multi-year negotiations.
If members of the train drivers’ and engine drivers’ unions voted against ratification, members could strike under federal law, but only after a cooling off period. That deadline ends on December 4 for some of the five remaining unions, although it could be extended to December 9 if end dates of conditions agree.