The ongoing strike at General Motors - set to enter its fourth week - has unleashed recessionary shockwaves across the nation. Exhibit A: the 85 tractor trailers full of hoods, bumpers and other car parts that sat unloaded in Lansing, Michigan this week, as captured by Bloomberg.
The consequences of the strike are rippling through parts suppliers in places like Michigan and Canada and also affecting ancillary businesses like restaurants and bars that serve GM employees.
Mike Luna, a warehouse worker and a chairman of United Auto Workers Local 652 said: “It’s a necessary strike but everyone is feeling the hurt.”
Luna works at Ryder, where about 500 workers have been laid off as a result of the strikes. The semi trailers left in their parking lot consist of auto parts destined for nearby General Motors plants. And the General Motors strike has reportedly chopped $400 million in direct wages out of the US economy, with half of that coming from Michigan. Even the US treasury has lost $154 million, so far, just in payroll and income taxes.
Look a the number ratio, not the absolute amount. In a sudden stop, direct losses in wage are about 3 times the losses in federal taxes. There is a multiplier, likely two in a value chain, so we can double the two numbers and get better estimate. Then there is profit loss to shareholders, including pension funds. Also, the lost wages and profits likely added another 150 million lost in state and local government.
But not enough, I think we still get doldrums, 1% growth for a few quarters. The Chicago teacher strike is coming, then we had the LA teachers, then a few mass layoffs. But they are not piling up, they seem to be happening according to plan, maybe to small sudden stops at a time. I think we are plotting to avoid a recession, seems normal and possible given our slot growth in general.
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