WASHINGTON, Nov. 28, 2022 /PRNewswire/ — As a looming freight rail strike threatens to shut down the U.S. economy, the American Chemistry Council (ACC) is calling on the White House and Congress to act quickly to keep vital chemical shipments moving.
“Chemical manufacturers are one of the first industries that will be impacted as railroads start restricting service up to a week before a threatened strike,” said Chris Jahn, ACC’s president and CEO. “Freight rail transportation is vital for transporting chemicals critical to everyday life, including water treatment, energy production and food production. Shutting down chemical shipments by rail would quickly send shockwaves that would be felt through the entire economy and households across the country.”
To prepare for a shutdown, railroads stop accepting “security sensitive shipments” – including certain chemicals – well in advance of a strike. Many chemical facilities would be forced to curtail production or shut down within the first week of a rail service embargo.
Fueling Inflation & Recession
No one would be immune if an actual strike and full shutdown of the rail network were to occur. ACC estimates a strike would put a chill on the entire economy and shove the country into a recession.
According to an economic analysis conducted by ACC, the impact of a potential strike would be felt almost immediately in terms of business shutdowns, scarcity of materials and goods, and lost economic activity. According to the analysis, a strike lasting one month would likely put a major chill on several leading economic indicators through the first half of 2023:
Job Loss: The U.S. economy would lose 700,000 jobs across multiple industries and economic sectors. These losses would essentially erase the job gains made over the past three months.
Inflation Spike: The Producer Price Index (PPI) would jump by four percent. PPI measures inflation from the viewpoint of industry and is considered a leading indicator for consumer inflation. A four percent spike would represent a twentyfold increase over the latest PPI reading.
Economic Slowdown: The Gross Domestic Product (GDP) would contract by one percentage point, which would pull almost $160 billion dollars out of the economy. To put this into perspective, during the financial meltdown in 2008, the economy lost $210 billion dollars through the first half of 2008.
“A rail strike could shove the economy out of recovery mode and into a recession,” said Martha Moore, ACC’s chief economist. “A prolonged strike would have an exponential effect for each additional month and drag the country into a potential recession much faster.”
Action Needed
To avoid a massive blow to a fragile U.S. economy, Congress must step-in before a strike occurs. That’s why ACC recently joined with hundreds of other business groups this week to call on Congress to prevent a strike.
“This is a preventable crisis that should not fall on the shoulders of American consumers and manufacturers,” said Jahn. “President Biden and Congress must act this week on a bipartisan solution based on the terms that labor leaders and railroads agreed to in September.”
American Chemistry Council
The American Chemistry Council (ACC) represents the leading companies engaged in the multibillion-dollar business of chemistry. ACC members apply the science of chemistry to make innovative products, technologies and services that make people’s lives better, healthier and safer. ACC is committed to improved environmental, health, safety and security performance through Responsible Care®; common sense advocacy addressing major public policy issues; and health and environmental research and product testing. ACC members and chemistry companies are among the largest investors in research and development, and are advancing products, processes and technologies to address climate change, enhance air and water quality, and progress toward a more sustainable, circular economy.
SOURCE American Chemistry Council