How a rail strike could impact the food, chemical, and automotive industries

Yahoo Finance's Jared Blikre breaks down how a nationwide rail strike could impact the U.S. economy in various industries.

Video Transcript

JARED BLIKRE: A rail strike could cost the US economy more than $2 billion per day. That's according to a report from the Association of American Railroads. President Biden saying a strike would, quote, "devastate our economy."

Around a third of US exports move by rail, and countless industries would be impacted by a shutdown. Freight railroads, they move over 1 and 1/2 million carloads of food products every year. Just one car can carry flour for 258,000 loaves of bread and barley for 94,000 gallons of beer gulp. More than a third of US grain exports move on the rail system. And that's all from the Association of American Railroads.

And peanut butter lovers, beware. About 30% of packaged foods in the US is moved by rail according to the Consumer Brands Association. Companies that make peanut butter, cooking oil, and cereal could be impacted by a strike. Chemical companies also could see an immediate negative impact from a strike, according to the American Chemistry Council. These companies would stop the transportation of chemicals relating to water treatment, energy production, and food production.

Then the council estimates that a one-month strike could cost the economy more than 700,000 jobs and that GDP would take a 1% hit, which is about a $160 billion loss. People looking for new cars could be out of luck in the case of a strike. Freight railroads have a big role in the production of a vehicle, from raw materials to delivering finished cars. Around 75% of new vehicles are transported via freight rail. Americans are already suffering from sky high prices from cars. A rail strike could deal a further blow to the industry.

All right, Dave, we've been talking about this for a little bit. And Biden looks like this thing is going to be ink. But this kind of reminds me of the debt ceiling just a little bit. Very politicized and could come down to the 11th hour.

DAVE BRIGGS: Yeah, probably will, given the tight timeline we're on, December 9 deadline. And for Biden, this is a tough spot. As Dani mentioned, the long time record of being a pro union senator, now president. He was one of six senators to vote against legislation that would force them back to work back in the, I think, it was the early '90s. And now he's come full swing. And he knows, this is, as he said, potentially devastating for our economy.

A couple of reasons to add to what you just gave us-- 765,000 jobs they estimate could be lost in the first two weeks. And what are the alternatives to rail? Well, probably trucks. And we're looking at 450,000 additional vehicles, which we don't have anywhere near the amount of vehicles. And we certainly don't have the drivers. We're already looking at a national shortage.

Just to sympathize for a second with their ploy-- with their plea, rather, Jared. Look, we all need and want paid sick times. On the other hand, 15 days is a massive ask. And that is one of the four unions who's not ratified that deal. They're not going to get 15. 24% pay raise is an awfully generous raise in any economy, my man.

JARED BLIKRE: Yeah, and it sounds like a lot of more back and forth is forthcoming.