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CEO Departures Surge, Auto Workers Authorize Strike, Mortgage Rates Hit Another High

CEO Departures Surge, Auto Workers Authorize Strike, Mortgage Rates Hit Another High

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CEO Departures Surge

CEO departures at U.S. companies totaled 197 in July, rising 67% from the prior month and beating the July 2022 figure by 240% as healthcare and other industries deal with economic uncertainties, according to the latest tracking by Challenger, Gray & Christmas.

The outplacement firm, which has studied CEO turnover for 20 years, said July’s departures were the highest for a single month since the record-setting 224 posted in May of this year. The total for January through July was 1,104, up 33% from the same time in 2022 and the highest for the first seven months since the firm started tracking exits in 2002.

“As layoffs slow, we’re beginning to see an increased pace of changes at the top,” Senior Vice President Andrew Challenger said in a statement. “As staffing needs and hiring normalize, boards are looking for leadership with staying power.”

Challenger’s July numbers showed the government/nonprofit category had the most CEO exits at 58, bringing its year-to-date total to 277, up 60% from the first seven months of 2022. Healthcare products and hospitals came next with 37 for the month and 191 for the year, and hospitals alone are up 56% for the year with 100 CEO departures.

The technology category had 11 CEO exits in July and 112 for the first seven months, up from 76 for January-July 2022. Technology has posted the most announced worker layoffs among categories this year as overall U.S. layoffs in the January-July period rose 203% from the same span during 2022 to nearly 482,000, Challenger reported.

Auto Workers Authorize Strike

Auto workers moved a step closer to a work stoppage that could prove costly for the U.S. economy as a prominent union Friday overwhelmingly granted its leaders authorization to strike against GM, Ford and Stellantis.

United Auto Workers leaders said a strike could occur if differences with the big automakers are not resolved in ongoing talks before the union’s current contract with those companies expires Sept. 14. The union said 97% of about 150,000 members approved the strike authorization, considered a procedural step within negotiations.

The union could eventually strike against one or all three of the automakers, though UAW President Shawn Fain has said the Big 3 as a group remains “our strike target.” GM reported in 2019 that a 40-day strike targeting that automaker caused a production drop of 300,000 vehicles and cost the company $3.6 billion in earnings.

A strike against all three automakers could cost the larger economy more than $5 billion in a span of just 10 days, according to a report this month from consulting firm Anderson Economic Group. Losses would extend beyond lost worker pay and automaker revenue to suppliers and other support businesses that depend on auto manufacturing in Michigan and several other states.

The union is calling for increased pay and other work benefits, while the automakers are seeking flexibility in hiring as the industry pivots to production of electric vehicles, which are less labor-intensive than gas-powered cars. Automakers and their dealers are among the nation’s largest users of industrial and retail space.

Mortgage Rates Hit High

Mortgage rates reached a 22-year high in the latest weekly lender survey by Freddie Mac, with 30-year, fixed-rate mortgages averaging 7.23% for the week that ended Aug. 24.

That rate topped the prior week’s average of 7.09%, which itself was the highest posted since 2001 before the new high was reached, the government-backed home lending agency reported.

Freddie Mac Chief Economist Sam Khater said recent indications of overall U.S. economic strength will probably keep upward pressure on mortgage rates at least in the short term.

“As rates remain high and supply of unsold homes woefully low, incoming data shows that existing home sales continue to fall,” Khater said in a statement. “However, there are slightly more new homes available, and sales of these new homes continue to rise, helping provide modest relief to the unyielding housing inventory predicament.”

The latest average rate for 30-year loans was also well above the year-earlier figure of 5.55%, Freddie Mac reported. The newest lender survey showed 15-year, fixed-rate loans averaging 6.55%, up from 6.46% in the prior week and topping the year-earlier average of 4.85%.

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