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Auto Industry Strike Drives Economic Uncertainty as Retail Sales Surge and Wall Street Gains
The auto sector in the U.S. is on watch as the strike continues, and on top of that, the negotiations reach a critical moment. The negotiations started weeks ago, yet the strike is almost about to reach 10 consecutive days, which will cost the U.S. economy greatly. Based on specialists’ first estimations, the strike might cost the U.S. market $5.6 billion in gross domestic product. Investors are closely watching the negotiations that are currently ahead between the UAW union and Detroit carmakers Ford (F), General Motors (GM), and Stellantis (STLA).
UAW President Shawn Fain commented on the negotiations and said, “To win, we’re likely going to have to take action.” He added, “Just as we have approached our negotiations differently than we have in the past, we’re preparing to strike these companies in a way they’ve never seen before.”
Based on these two comments, UAW President Sean Fein emphasized the need for action and a different approach to negotiations. The comments hinted at a potentially unconventional strike strategy, starting with targeted lockouts at specific U.S. plants and then escalating into larger strikes, always taking into account the financial considerations of the union and its members.
The UAW may initially target specific plants to minimize the financial burden of providing strike wages to all 146,000 members, meaning it wants its actions to be strategic and cost-effective.
In other economic news, retail sales boosted stock market gains for the Thursday trading session. The report came in higher than expected and at a critical time as well, while investors kept digesting the Wednesday consumer index report. The August CPI report was 0.6% higher and 3.7% higher year over year. The jump in consumer prices was primarily due to the high increase in gas prices, which were reported to be up by more than 10% last month.
Overall, it remains good news to see that the inflationary pressure is getting cooler month by month. Yet, compared to the targeting point, it still has to go to at least 2.5% to convince the FED to stop rising key interest rates.
Getting back to the fresh news, consumer prices in the United States reached their highest level in 14 months in August, due to a 10% increase in gasoline prices, despite core annual inflation being at its lowest in almost two years.
Moving to Wall Street, as of 12:12 a.m. ET, the S&P 500 benchmark was up by 0.68% to 4,496.35 basis points. The tech-heavy Nasdaq composite was up by 0.76% to 13,918.30 basis points. And the Dow Jones Industrial Average industry climbed by 0.64% to 34.795.12 basis points.
Nonetheless, the Fed remains committed to holding lending rates within a quarter-base range at its forthcoming meeting. However, the surprise jump in headline inflation contrasts with past colder data, casting doubt on a November or December rate hike. Furthermore, the producer price index outperformed expectations in August, retail sales climbed more than predicted, and weekly jobless claims were fewer than projected.
