UAW President Shawn Fain said the union’s strategy will feature strikes at a limited number of strategically selected plants to “keep the companies guessing.” | Paul Sancya/AP PhotoThe strike against Detroit’s Big Three automakers is hitting the U.S. economy at a precarious time — as it’s struggling with an era of high inflation and soaring borrowing costs.
“None of these is a shot in the temple; they’re nonfatal,” Federal Financial Analytics managing partner Karen Petrou said. “But none is good, and the American public is fragile. It doesn’t take much to throw them off.” A lengthy strike “probably would be inflationary,” James Bullard, who led the Federal Reserve Bank of St. Louis until this summer, told POLITICO on Thursday. “The car market has been disrupted by the pandemic and has not really returned to normal.”
“It’s tough to measure these things. There’s a lot of uncertainty around how that would play out,” said Gabriel Ehrlich, director of the University of Michigan’s Research Seminar in Quantitative Economics. But if prices spike, it might take longer for inflation in the auto market to recover, “particularly since the resolution of the strike will presumably involve some increase in auto labor costs under whatever agreement they come to,” Goldman’s Chief U.S. Political Economist Alec Phillips told POLITICO.