WASHINGTON, November 28, 2022 /PRNewswire/ — As an impending freight railroad strike threatens to cripple the U.S. economy, the American Chemistry Council (ACC) is calling on the White House and Congress to act quickly to keep shipments of vital chemicals.
“Chemical manufacturers are one of the first industries to be hit as the railroads begin to restrict service until a week before a strike threat,” said Chris Jahn, President and CEO of VAC. “Freight rail transport is vital for transporting chemicals essential to daily life, including water treatment, energy generation and food production. Halting chemical shipments by rail would quickly send shockwaves that would reverberate throughout the economy and households across the country.
To prepare for a shutdown, the railways stop accepting “safety sensitive shipments” – including some chemicals – long before a strike. Many chemical facilities would be forced to cut production or close in the first week of a rail service embargo.
Fueling inflation and recession
No one would be safe from a real strike and a complete shutdown of the rail network. The ACC believes that a strike would put a chill on the whole economy and plunge the country into a recession.
According to an economic analysis conducted by the ACC, the impact of a possible strike would be felt almost immediately in terms of business closures, shortage of materials and goods and loss of economic activity. According to the analysis, a month-long strike would likely put a major chill on several leading economic indicators in the first half of 2023:
- Job Loss: The US economy would lose 700,000 jobs across multiple industries and economic sectors. These losses would essentially wipe out the job gains made over the past three months.
- Inflation peak: The Producer Price Index (PPI) would jump four percent. The PPI measures inflation from an industry perspective and is considered a leading indicator of consumer inflation. A four percent spike would represent a twenty-fold increase from the last PPI reading.
- Economic downturn: Gross domestic product (GDP) would contract by one percentage point, which would almost pull $160 billion out of the economy. To put this into perspective, during the financial crisis of 2008, the economy lost $210 billion until the first half of 2008.
“A railroad strike could knock the economy out of recovery mode and into a recession,” he said. Martha Moore, chief economist of the ACC. “A prolonged strike would have an exponential effect for every additional month and would drag the country into a potential recession much faster.”
Action needed
To avoid a blow to a fragile US economy, Congress must intervene before a strike occurs. That’s why the ACC recently joined hundreds of other business groups this week in calling on Congress to prevent a strike.
“This is a preventable crisis that should not fall on the shoulders of American consumers and manufacturers,” Jahn said. “President Biden and Congress must act this week on a bipartisan solution based on the terms that labor leaders and the railroads agreed to in September.”
american chemistry board
The American Chemistry Council (ACC) represents major companies engaged in the multi-billion dollar chemical industry. ACC members apply the science of chemistry to create innovative products, technologies and services that make people’s lives better, healthier and safer. ACC is committed to improving its environmental, health, safety and security performance through Responsible Care®; advocating for common sense addressing key public policy issues; and health and environmental research and product testing. ACC members and chemical companies are among the largest investors in research and development and advance products, processes and technologies to fight climate change, improve air quality and water and move towards a more sustainable circular economy.
SOURCE American Chemistry Board
