At stake in the strikes
Summary
While the ongoing United Auto Workers strike impacts all three major automakers, the number of picketers even after the latest escalation sums to just over 18,000, not even half the number of strikers involved in the strike against General Motors in 2019. Yet angst is elevated because the combination of a well-capitalized union and an unusually tight labor market make for a potentially long standoff, adding yet another hurdle to taming inflation without a decline in economic activity.
For now, the surgical approach to the walk-offs is helping to limit the hit to production and union workers' income despite all three of the major automakers being in the crosshairs. Yet the renewed threat to motor vehicle dealer inventories could temporarily thwart the downward trend in autos inflation, which has been an influential source in lowering both headline and core inflation since early 2022. This report explores how the longer the strike goes on, the worse the potential impact on the economy.
Author
Wells Fargo Research Team
Wells Fargo
