With the potential of a freight rail strike looming and only narrowly evaded earlier this year, a new economic analysis undertaken by the American Chemistry Council (ACC) added weight to calls for reconciliation and prevention, warning that such a strike would severely impact the national economy.
With the country already seemingly in the grips of inflation, adding this fuel to the fire would, according to the report, cost the U.S. up to 700,000 jobs across multiple industries in a single month and spike inflation, with a 4 percent jump predicted for the Producer Price Index (PPI) that measures inflation from an industry viewpoint. For context, a four-point jump would represent a 20-fold increase compared to the last PPI reading. It would also coincide with a 1 percent contraction in the nation’s Gross Domestic Product (GDP).
If the loss of jobs didn’t paint a clear enough picture, in dollar terms, the impact would amount to nearly $160 billion yanked from the economy in the first half of 2023. Business shutdowns would likely increase, along with growing scarcities of goods and materials.
“A rail strike could shove the economy out of recovery mode and into a recession,” Martha Moore, ACC’s chief economist, said. “A prolonged strike would have an exponential effect for each additional month and drag the country into a potential recession much faster.”
Freight rail is critical to the chemical manufacturing industry, among others – hence the ACC’s interest. Its president and CEO, Chris Jahn, actively called on Congress to step in and pass legislation based on terms agreed to by labor leaders and railroads in September 2022.
“American consumers and manufacturers are still struggling to deal with inflation and don’t need to be hit with a new crisis,” Jahn said.
U.S. chemical manufacturers ship more than 33,000 carloads of supplies by rail per week, worth approximately $2.8 billion in real value.