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- More than 90,000 freight railroad workers are preparing to strike for better pay and more time off.
- Officials have warned that the strikes could cost the US economy $2 billion a day.
- But the strikes won’t cause an economic ‘black swan’ event, Goldman Sachs’s Jan Hatzius said.
Striking freight-railroad workers are unlikely to trigger an economic shock, despite officials’ warning that a walkout could curb growth and drive up inflation, according to a leading Goldman Sachs strategist.
Jan Hatzius said that strikes are unlikely to become an economic ‘black swan’ — typically defined as an unexpected or surprising event that has severe consequences for financial markets — despite a recent warning from the Federal Railroad Administration that a walkout could cost the US economy $2 billion a day.
“I don’t think it’s a black swan,” Goldman Sachs’s chief economist told Yahoo Finance Live Monday. “I think it’s an indication, along with other indications of more labor strife and maybe more tensions, that labor still has a very significant amount of market power relative to the last several decades.”
More than 90,000 workers at some of the US’s largest freight railroads could strike if firms are unable to broker a deal with unions by September 16. They’re demanding higher wages, more time off, and better shift-scheduling processes — as workers’ bargaining power has been boosted by the low level of unemployment across the US.
“The labor market is extremely tight,” Hatzius said. “Employers have to concede bigger wage increases and better working conditions, and strikes are sometimes the consequence of that.”
Some economists fear that strikes will also push up food prices, driving inflation — which is already running close to four-decade highs — up even further. But Hatzius shrugged off those worries, arguing that any food-price shock from railroad strikes would likely be temporary.
“I don’t think it’s going to have a major impact on food prices, certainly beyond the very near term,” he said.
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