No, UAW Strike Would Not Tip the Economy Into Recession - Economist Says

A strike by United Auto Workers (UAW) at the Big Three automobile giants, including General Motors Co GM, Ford Motor Co F and Stellantis NV STLA would not be sufficient to cause a recession, said RSM US LLP economist Joseph Brusuelas.

A Michigan-based economic consultancy had pinned a $5.6 billion potential loss to the U.S. gross domestic product for a 10-day strike by the UAW.

Brusuelas estimated that the economy could suffer a modest 0.2% drag this quarter should the action last for a month.

However, Brusuelas added that the amount does not seem large enough to cause an economic recession, and the impact would not be as severe as seen in previous generations.

He accorded this to the declining labor unions in the U.S., with only 6% of private sector workers now affiliated with one.

“The major labor action of 1945-46 involved 320,000 autoworkers at a time when the U.S. labor force had approximately 40 million to 43 million workers in contrast with 166 million today,” he said.

The UAW now constitutes about 146,000 auto workers at the three companies.

UAW President Shawn Fain‘s demands include a defined-benefit pension, retiree health care, pay raises equal to 46% over four years, a 32-hour work week, reinstatement of cost-of-living allowances, and the end of tiered pay. 

Price Action: GM shares are trading lower by 0.59% at $32.76 on the last check Monday.