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A long strike could be devastating to Michigan's economy

Posted at 7:54 PM, Sep 17, 2019
and last updated 2019-09-17 19:54:33-04

LANSING, Mich. — Just a regular slowdown in the auto industry can be rough on Michigan's economy so having the UAW strike against General Motors last for weeks or months could be devastating.

Even just two days into the strike, UAW and contract workers are starting to conserve cash, not spend it.

"Fewer paychecks mean less spending at businesses in the state as well as less money circulating in the economy," said Sarah Nixon, a senior analyst for Anderson Economic Group in East Lansing.

Which leads to less money for businesses that rely on customers who work in the industry and less tax revenue for the state.

Some suppliers have already laid off workers. Nixon said that will get even worse if the strike drags on for a week or more.

"There we could see reduced work and reduced hours for workers in those industries as well as potential furloughs for some hourly workers."

The effects of the strike are already being felt in communities with auto plants and it will spread to other parts of the state if the strike were to continue past ten days. By that point, GM dealers may have a hard time meeting customer demand.

"There's a chance that as the strike continues, inventories across the U.S. begin to decline and you may start to see us consumers shift to other car manufacturers."

The big picture gets even worse if the state doesn't get a budget passed before Oct. 1, forcing the government to shut down and furloughing 48,000 workers.

Economists said that could quickly drag the entire state into a recession.

As far as the U.S. economy goes, Nixon said that the automotive industry only contributes 3% to the nation's Gross Domestic Product (GDP) so there wouldn't be a significant impact unless the strike goes on for a long time.

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