The Economic Impact of a Hard-Hit Auto Industry

By November 6, 2008General

From the Center for Automotive Research, a news release summarizing a new report, “The Impact on the U.S. Economy of a Major Contraction of the Detroit Three Automakers.”

ANN ARBOR, Mich., Nov. 5, 2008 – Researchers at the Center for Automotive Research (CAR) in Ann Arbor, Michigan, estimate the impact on the U.S. economy would be substantial were all-or even half-of the three Detroit-based automotive manufacturers’ U.S. facilities to cease operations. The immediate shock to the economy would be felt well beyond the Detroit Three companies, negatively impacting the U.S. operations of international manufacturers and suppliers as well. Nearly 3 million jobs would be lost in the first year if there is a 100 percent reduction in Detroit Three U.S. operations.

“Our model estimates that a complete shutdown of Detroit Three U.S. production would have a major impact on the U.S. economy in terms of lost wages, reductions in social security receipts, personal income taxes paid, and an increase in transfer payments,” said Sean McAlinden, CAR chief economist and the study’s leader. “The government stands to lose on the level of $60 billion in the first year alone, and the three year total is well over $156 billion.”

 

Leave a Reply