STLA - Obama-Era Advisor Jason Furman Says Ongoing UAW Strike Unlikely To Turn GDP Growth Negative For Q3 But... | Benzinga
Former Obama advisor Jason Furman cautioned on Monday that the ongoing strike by the United Auto Workers (UAW) could have a significant impact on the GDP growth rates.
What Happened: Furman highlighted that small changes can lead to substantial shifts in annualized GDP growth rates. He pointed out that if something reduces the GDP by $30 billion in a quarter, it translates to a 2 percentage point reduction in the annualized growth rate.
Small changes can result in large change in annualized GDP growth rates. — Jason Furman (@jasonfurman) September 18, 2023
IF something lowers GDP by $30b in a quarter that is 2pp redn in the annualized growth rate. Can be the difference btwn positive & negative growth.
BTW, auto industry is ~$200b/quarter. Big 3 ~1/2 of that.
This could mean the difference between positive and negative growth. Furman further noted that the auto industry contributes approximately $200 billion per quarter, with the Big 3 automakers accounting for about half of that. He also mentioned that a strike is very unlikely to turn growth negative for third quarter since less than 1/6 of the period would be disrupted, equating to less than $16 billion or 1 percentage point of GDP at an annual rate. However, if there were a full month of disruption in October, it could total about $30 billion, though this could be partially reversed in the subsequent months.