Auto Workers Protesting Their Way To Unemployment?

Market Overview
Read time 1.2 minutes

Year To Date Performances:

1. For the first time since 1935, the United Auto Workers (UAW) union has called a simultaneous strike against Ford, GM, and Stellantis, bringing over 13,000 workers to a halt. At the heart of the dispute is a call for a significant wage hike - the union is pushing for a 36% rise in pay over four years, whereas the automakers' offers are considerably less. Ford maintains that meeting such demands would have driven them to a staggering $15B loss, and even bankruptcy, over the past ten years. On the flip side, the UAW points to the industry's robust earnings, stressing that labor costs account for a mere 4-5% of vehicle production expenses. The duration of the strike remains uncertain; the union's funds can sustain workers for roughly 11 weeks, and in terms of inventory, Stellantis, Ford, and GM are stocked for 75, 62, and 51 days, respectively. The global automotive community watches eagerly, knowing the repercussions could ripple worldwide. If prolonged, dealerships may grapple with low inventory, potentially driving up car prices - a scenario that complicates the Federal Reserve's fight against inflation. An important sidebar: while workers' rights to demand better conditions is undeniable, there's a looming backdrop. Similar demands in other sectors, like fast food, resulted in a surge of automation investments. It's a dynamic worth pondering.

2. Buckle up, economy-watchers: the Federal Reserve may hike interest rates again in 2023! While this week's Fed meeting is expected to keep rates stable at a whopping 22-year high of 5.25-5.5%, growth prospects are looking rosier; however, inflation remains a stubborn issue, predicted to end the year at 3.2%. Because of this, analysts till believe there will be another rate hike before the end of the year. But here's some good news: the likelihood of a looming recession has decreased, with odds dropping from 67% to 45%.

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4. Headlines

   1. US incomes (inflation-adjusted) are down for the third consecutive year. Never in American history has this not led to a recession.

   2. While the government has you believing employment is high. The truth is that unemployment rates are low because the Labour Force Participation rates are near all-time lows (excluding COVID-19-impacted levels). People just don’t want to work.

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