• Rail Strike Threat Looms Over Holiday Season, Business Activity

    Rail Strike Threat Looms Over Holiday Season

    A prominent union's resistance to a proposed railroad labor contract puts the industry on the verge of a December strike that could significantly disrupt the peak holiday retail season and could impact the larger economy if it persists.

    As of Monday, eight of 12 rail labor unions had ratified an agreement worked out earlier this year in talks involving unions, rail companies and federal mediators that temporarily averted a strike in September. In the latest turn Monday, members of a conductors union narrowly voted to reject a new five-year contract, while a prominent engineers union approved it by a slim margin.

    Railroad unions are currently in a “cooling off” period in which they have agreed to continue working while contract differences are being hashed out. That period is slated to end Dec. 8, making a strike possible at 12 a.m. on Dec. 9. According to the Association of American Railroads, a trade group that includes the major U.S. carriers, a nationwide rail strike could cost the economy more than $2 billion a day as it halts service on nearly 7,000 freight trains.

    “American businesses and families are already facing increased prices due to persistent inflation, and a rail strike will create greater inflationary pressures and will threaten business resiliency,” Matthew Shay, CEO of the National Retail Federation trade group, said in a Monday statement. “Congress must intervene immediately to avoid a rail strike and a catastrophic shutdown of the freight rail system.”

    The Retail Industry Leaders Association, another trade group whose members include major retailers such as Walmart, Target and Best Buy, said in its own statement that a rail strike could cause “enormous disruption to the flow of goods nationwide,” with a ripple effect on supply chains still reeling from the pandemic.

    “This can all be settled through negotiations and without a strike,” said Jeremy Ferguson, president of SMART-TD, in a statement from the union representing conductors, noting negotiations would continue. “A settlement would be in the best interests of the workers, the railroads, shippers and the American people.”

    Business Activity Declines

    U.S. economic growth slowed in October from the prior month and remained below year-earlier levels, according to the latest tracking of nationwide business activity by the Federal Reserve Bank of Chicago.

    The regional Fed uses government data to track activity across categories including production and income, employment, sales and inventories and personal consumption, including spending on housing, with numbers below zero indicating contraction in business activity.

    For October, the Chicago Fed’s national activity index was negative 0.05, down from a positive 0.17 in September and from 0.83 in October 2021. The Chicago Fed said categories dragging down growth in October included industrial production, sales and inventories and employment. Those propping up growth included personal consumption and housing, partly a result of inflation.

    The mixed signals reflect a larger economy looking to recover from historically high inflation and higher interest rates. The Commerce Department reported last month that U.S. gross domestic product rose at an annual rate of 2.6% in the third quarter, following two quarters of contraction, and analysts are predicting muted economic growth in the coming year.

    Source: www.CoStar.com