The largest U.S. labor strike in a decade is starting to ripple through the nation’s economy, with the potential to weaken data on manufacturing and jobs that economists are scrutinizing for signs of a recession.
Now in its fourth week, the walkout of 48,000 General Motors workers has forced the shutdown of 34 plants across the United States. That is already showing up in weekly jobless claims and will lower the Labor Department’s payroll figures for October, according to economists. It may also weigh on the monthly manufacturing surveys and production numbers. The biggest, and hardest to predict, is the risk of spillover into consumer confidence and spending, which accounts for nearly three-quarters of growth.
The effects of the strike are exacerbated in an economy already facing systemic issues, including slowing manufacturing as companies step down investment amid uncertainty caused by the U.S.-China trade war and global slump. Although economists expect the strike’s effect to be temporary, deterioration in economic reports would create challenges for forecasters, who see a 35% chance of recession over the next 12 months.
“It’s a vulnerable picture, and the strike adds to the bucket of risks and volatility that the consumer is looking at,” said Julia Coronado, president of MacroPolicy Perspectives, an independent research firm. “The risks are just stacking up, and when you get an accumulation of risks stacking up, sometimes they can feed on each other.”
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