Daniel Silverman, an economist working for JP Morgan says a 30-day strike by employees of General Motors could decrease job growth numbers for the United States by as much 75,000 in October. This development is unwelcomed at a time when many predictors point to an oncoming recession.
Silver explained the General Motors strike would result in 48,000 fewer workers for the automaker.
According to detroitnews.com, the current strike has caused many to revisit a 1998 strike by GM workers that resulted in 150,000 loss of jobs. The effects of that strike were felt in other aspects of the automobile industry also.
The Labor Department maintains the labor report and treats workers on strike as unemployed. The October employment statistics are set to be released on the first of November.
The strike at GM plants began in mid-September and includes 50,000 workers. Silver says the drag on unemployment that results from the strike should be about 75,000.
The United Autoworkers Union reached a deal with GM on Wednesday that may end the strike. However, workers remain at home while awaiting a vote on the compromise.
The manufacturing output for September shows depressed numbers also due to the strike.
Silver says no dramatic increase in the unemployment rate is expected as a result of the strike. He explained that 164,000 jobs would have to be lost to affect a one-tenth of a percent increase in the rate of unemployment.
Despite the fact job losses will be temporary, analysts are concerned with the effect the October payroll decrease may have on markets that are already suffering the effects of slowed job growth in September. The 136,000 payroll increase from a month ago was down approximately 25 percent from the 2019 monthly average. Additionally, the three-month average for job growth fell to its lowest point since 2012.
Weak numbers for manufacturing, production and retail sales in September have also worked to put the brakes on the longest period of expansion for the American economy that has ever been recorded. The eleven-year run is in jeopardy due to the trade war between America and China that has now lasted fifteen months.
Dil Bole Oberoi
