Derailed 🚂

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Derailed

Just as we got a terrible inflation report, more news has come that could exacerbate the situation. There is a chance that freight and railroad workers are set to go on strike in what would be a devastating move for the economy, and the government is scrambling to fix this. Friday is the deadline for negotiations between railroad workers and the unions representing them and things are looking grim. Just yesterday, it was announced that one of the unions suffered a setback with the members rejecting the agreement between both parties and if this isn’t solved, workers will go on strike until further notice.

The economy simply can’t take this now as an employee strike can help add fuel to the fires the economy is dealing with. Supply chains would be destroyed and many are saying this is what will send us into a recession. The rail network accounts for 28 percent of freight in the United States, making it second behind trucks, and it is very important for the food industry and energy sector. Railroads transport commodities like oil and ethanol all over the country, and if this strike were to occur, gas prices would likely rise back up. This goes for all sectors, as supply chain issues would raise prices, increasing inflation at the worst possible time. Extra stress would be placed on other forms of freight like trucking and the industry simply can’t handle that. Amtrak has already said they are going to suspend all long-distance train services to avoid disruptions, but this isn’t necessarily Doomsday either.

Since the government is involved, it’s likely this issue will get resolved before the deadline or Congress will intervene in order to delay the strike. President Biden is a big supporter of unions, but that might not be the case this time.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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