Today is
Thursday September 19, 2024
(NEW YORK) -- The Federal Reserve delivered a jumbo-sized rate cut this week in a move widely viewed as a declaration of victory over inflation and a signal of relief for borrowers.
Few areas of the economy welcomed the news more than the nation’s sluggish housing market, where high mortgage rates have largely shut out homebuyers.
Experts who spoke to ABC News cautioned that the rate cut would not deliver an immediate drop in mortgage rates or a loosening up of the housing market.
Mortgage rates had already dropped over recent months in anticipation of the rate cut, they said. They forecasted a gradual thaw in the market as homebuyers perk up and borrowing costs slowly decline.
“This is a harbinger of good times to come, but we’re not there yet,” Susan Wachter, a professor of real estate at University of Pennsylvania's Wharton School of Business, told ABC News.
Here’s what to know about what the Fed’s rate cut means for mortgage rates and the housing market.
What does the Fed’s rate cut mean for mortgage rates?
The interest rate cut likely will not have a significant impact on mortgage rates over the short term, experts said. That’s because mortgage rates had already moved due to an expectation of this rate decision.
The average interest rate for a 30-year fixed mortgage stands at 6.09%, according to Freddie Mac data released on Thursday.
That figure has plummeted more than a percentage point since May. The average interest rate for a 30-year mortgage has dropped even further from a peak reached last October.
“Everybody has been talking about an expected drop in the Fed Funds rate,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, told ABC News. “The mortgage market heard that loud and clear.”
Initial evidence suggesting unchanged mortgage rates can be found in the yield on a 10-year Treasury bond, experts said.
Mortgage rates closely track the yield on a 10-year Treasury bond, or the amount paid to a bondholder annually. In the aftermath of the Fed’s rate cut on Wednesday, the yield on a 10-year Treasury bond ticked slightly upward, defying the nudge downward by the central bank.
“Ten-year rates are basically pricing in the effect of interest rates coming down,” Lu Liu, a professor at the Wharton School at the University of Pennsylvania, told ABC News.
Still, experts added, mortgage rates may gradually decline over the remainder of 2024 and the duration of 2025.
The Federal Open Market Committee, a policymaking body at the Fed, on Wednesday forecasted further interest rate cuts.
By the end of 2024, interest rates will fall nearly another half of a percentage point from their current level of between 4.75% and 5%, according to FOMC projections. Interest rates will drop another percentage point over the course of 2025, the projections indicated.
If interest rates track those projections, then mortgage rates may see some decline as investors gain confidence that falling interest rates will not hit a snag, experts said.
“By the end of 2025, we can expect mortgage rates to be in the 5% range,” Wachter said.
Lautz offered a slightly less optimistic assessment, predicting mortgage rates next year in the high 5% range.
Uncertainty about the path of mortgage rates remains significant, said Liu. “It’s always a little bit of wait and see,” Liu said.
Experts agreed, however, that mortgage rates would not return to levels of between 2% and 3% enjoyed by homebuyers as recently as 2021. Those rates came in response to aggressive rate cuts at the Fed in response to COVID-19.
“That was a very unusual environment,” Lautz said. “It’s very unlikely to happen.”
What does the Fed’s rate cut mean for the housing market?
Experts expect the housing market to eventually heat up. But they do not expect the interest rate cut to deliver a sudden jolt.
The housing market remains sluggish. Existing-home sales declined 2.5% in August compared to the previous month, according to a report released by the National Association of Realtors on Thursday. The slowdown took place despite a significant decline in mortgage rates over that period.
The housing market will loosen up as low mortgage rates trickle through to homebuyers, and as those consumers proceed through the monthslong process of purchasing a home, experts said. The lower mortgage rates will also entice prospective buyers who previously balked at higher borrowing costs, they added.
Still, the current drop in mortgage rates may not rekindle the housing market, experts said, citing a phenomenon known as the "lock-in effect."
While mortgage rates have fallen, they remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage.
In turn, the market could continue to suffer from a lack of supply, making options limited and prices sticky. Over the coming months, however, the housing market could loosen up, experts said.
“Now with rates coming down, we may gradually see some people willing to give up lower rates, move and sell their houses,” Liu said. “Hopefully there will be a little more supply on the market, but prices aren’t likely to come down all that much.”
Lautz agreed, predicting better days ahead. “It’s a slow burn,” she said. “We should see a change in activity and more buyers able to afford the market.”
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(NEW YORK) -- Instagram this week unveiled mandatory accounts for teens that bolster privacy protections, enable parental supervision, and restrict notifications during overnight hours.
New and existing users under the age of 18 will be automatically enrolled in what Instagram is calling "Teen Accounts," the company said.
The move comes 16 months after U.S. Surgeon General Vivek Murthy warned in an advisory that excessive social media could pose a “profound risk” to the mental health of children. Instagram also has faced pressure from some federal and state lawmakers seeking to regulate social media use among children and teens.
Experts who spoke to ABC News differed about whether Meta's new restrictions for teen users would effectively mitigate the risks that young Instagram users face.
Some experts applauded the guardrails as a meaningful, though insufficient, step toward preventing teen harm. Others said the absence of robust age verification account measures would allow young users to circumvent the rules, rendering the new settings largely pointless.
In response to an ABC News request for comment, Meta said the company is expanding its efforts to verify the age of teen users.
"We’re requiring teens to verify their age in new ways. For example, if they attempt to create a new account with an adult birthday, we will require them to verify their age in order to use the account," Meta spokesperson Dani Lever told ABC News.
"We also want to do more to proactively find accounts belonging to teens, even if the account lists an adult birthday. We're building technology to proactively find these teens and place them in the same protections offered by Teen Account settings," Lever added.
One expert said the restrictions also risk going too far, potentially limiting the free expression of teens and subjecting them to the control of parents with whom they may disagree about fundamental aspects of their identity.
“We need to be conscientious about the content that platforms are showing kids and how that can shape offline attitudes and behaviors,” Jon-Patrick Allem, a professor of public health at Rutgers University, told ABC News.
Allem added that he is reserving judgment until the changes receive further examination.
The new Teen Accounts were announced by Instagram head Adam Mosseri in a live interview Tuesday on ABC News' Good Morning America.
"They're an automatic set of protections for teens that try to proactively address the top concerns that we've heard from parents about teens online," Mosseri told GMA. "Things like who can contact them, what content they see and how much time they spend on their device ... all without requiring any involvement from the parent."
New teen users will automatically be enrolled in Teen Accounts, while existing teen users will see their accounts switch to the new model within 60 days, Mosseri said on GMA.
The new accounts will place users under 18 years old into a private account by default, the company said, while users under age 16 will require parental permission to switch over to a public account. Under the private account setting, teens will need to specifically accept new followers, and only those followers will be able to see their content and interact with them.
With the new accounts, teens also will have the power to choose the age-appropriate topics they want to see more of on Instagram, like sports or art, and parents will also be able to see the topics their teens choose, according to Instagram.
Jonathan Haidt, a social psychologist at New York University and author of The Anxious Generation: How the Great Rewiring of Childhood Is Causing an Epidemic of Mental Illness, offered lukewarm praise for the restrictions in a post on X on Tuesday.
“I am cautiously optimistic about Meta’s new teen accounts,” Haidt said. “Most of the problems with social media will still plague teens on Instagram. But this is a good start, and I hope it is just the first of many steps from Meta.”
Paul Barrett, a professor at New York University Law School and deputy director of the NYU Stern Center for Business and Human Rights, acknowledged that some of the Instagram changes would alleviate harm endured by teens on the platform. However, he added that the move would likely have little impact in the absence of better age verification measures to ensure that teens enroll in the Teen Accounts.
“This points in the right direction,” Barrett told ABC News. But, he added: “None of this is very meaningful until the company does something about age and identity verification. All of the other requirements become ineffective if kids just pretend that they’re adults.”
At least one expert said the changes risk causing some harm by putting too many restrictions on teen Instagram users. For instance, a child’s parents may have different views about fundamental questions of identity, such as whether one should believe in god, Eric Goldman, a professor at Santa Clara University School of Law who studies content moderation, told ABC News. The increased parental supervision in the new accounts could enable such parents to limit their child’s personal growth, he added.
“Parents might have norms about certain behavior for their children,” Goldman said. “This might take away self-expression and self-exploration.”
In general, some children would likely benefit from the changes, while others would suffer harm, he added.
“Groups of children have different needs,” Goldman said. “If it’s a one-size-fits-all solution, some children are likely to benefit and others are likely to be harmed," though he added that Instagram has the right to make changes that it deems appropriate.
In response to such criticism, Meta said the company worked with relevant stakeholders to strike a balance between user experience and parental involvement.
"We consulted with parents, teens, and experts throughout the process of building Teen Accounts. With these changes, parents decide if teens under 16 can change the built-in settings," said Lever, of Meta. "This allows teens to use social media to connect with friends, explore and discover, while giving parents peace of mind that their teens have the right protections in place."
“If Instagram is adopting this because they think it’s the best for users, I support their freedom to set the policies and approach that is right for them,” Goldman said.
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(NEW YORK) -- The Federal Reserve cut its benchmark interest rate a half of a percentage point on Wednesday in a landmark decision that dials back its years-long fight against inflation and could deliver relief for borrowers saddled with high costs.
The central bank’s first rate cut since 2020 came after a recent stretch of data had established the key conditions for a rate cut: falling inflation and slowing job gains.
In theory, lower interest rates help stimulate economic activity and boost employment. The Dow Jones Industrial Average surged 200 points in the immediate aftermath of the announcement on Wednesday afternoon.
The S&P 500 and the Nasdaq also climbed following the news.
Speaking at a press conference in Washington D.C. on Wednesday, Fed Chair Jerome Powell described the rate decision as a shift in policy at the central bank.
"This recalibration of our policy stance will help maintain the strength of the economy and the labor market, and enable further progress on inflation," Powell said.
"The U.S. economy is in good shape," Powell added. "We want to keep it there."
The Federal Open Market Committee, a policymaking body at the Fed, on Wednesday forecast further interest rate cuts.
By the end of 2024, interest rates will fall nearly another half of a percentage point from their current level of between 4.75% and 5%, according to FOMC projections. Interest rates will drop another percentage point over the course of 2025, the projections indicated.
Over time, rate cuts ease the burden on borrowers for everything from home mortgages to credit cards to cars, making it cheaper to get a loan or refinance one. The cuts also boost company valuations, potentially helping fuel returns for stockholders.
Earlier this year, mortgage rates reached their highest level in more than two decades; while the average rate for credit card holders topped anything on record at the Fed. Interest rates for car loans have soared to levels last seen at the onset of the 2008 financial crisis, Edmunds found.
Interest rate cuts will bring many of those payments down, delivering gains for borrowers.
However, borrowers should not expect immediate relief from the Fed's initial rate cut, Elizabeth Renter, senior economist at NerdWallet, told ABC News in a statement prior to the decision.
"This initial rate cut will have little immediate impact," Renter said. "I anticipate many consumers and business owners will take the beginning of this change in monetary policy as a sign of hope."
Inflation has slowed dramatically from a peak of about 9% in 2022, though it remains slightly higher than the Fed's target of 2%.
Meanwhile, the job market has cooled. A weaker-than-expected jobs report in each of the last two months has stoked concern among some economists.
"We will do everything we can to support a strong labor market as we make further progress toward price stability," Powell said last month.
Prior to the decision, the chances of a rate cut were are all but certain, according to the CME FedWatch Tool, a measure of market sentiment.
Market observers, however, had been divided over whether the Fed will impose its typical cut of a quarter of a percentage point, or opt for a larger half-point cut. The tool estimated the probability of a half-point cut at 65% and the odds of a quarter-point cut at 35%.
A half-point cut risked overstimulating the economy and rekindling elevated inflation, while a quarter-point cut threatened to delay the type of economic jumpstart that may be required to avert a recession, Seema Shah, chief global strategist at Principal Asset Management, told ABC News in a statement.
"Rarely have market expectations been so torn" on the eve of a rate decision, Shah added.
The rate cut on Wednesday went into effect less than 50 days before the November election.
The decision deviated from the policy approach taken by the Fed prior to many recent presidential elections, a Reuters analysis found. Policy rates were left unchanged for six to 12 months before the 2020, 2016, 2012 and 2000 U.S. presidential elections, according to Reuters.
To be sure, the Fed says it bases its decisions on economic conditions and operates as an independent government body.
When asked about the 2024 election at a press conference in Washington, D.C., in December, Powell said, "We don't think about politics."
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(NEW YORK) -- Drivers have enjoyed a sharp decline in gasoline prices over recent weeks -- and the good times are expected to continue.
Gas prices have plummeted about 13% from a 2024 peak in April, which amounts to a decline of nearly 50 cents per gallon, according to AAA data shared with ABC News.
The national average price of a gallon of gas stands at $3.20, AAA data shows. In 16 states, an average gallon of gas costs less than $3, including Texas Georgia, North Carolina, Wisconsin, Kansas and Iowa.
Speaking to ABC News, some experts forecasted that the national average price would likely follow suit, dropping below $3 per gallon for the first time since May 2021.
The drop in prices owes in part to sluggish demand for gas as the busy summer traveling season has given way to an autumn slowdown, experts said. Meanwhile, they added, a sharp decline in the price of crude oil has propelled an even larger drop-off in gas prices than typically seen at this time of year.
“Gas prices continue to crumble across the entire nation,” Patrick de Haan, the head of petroleum analysis at GasBuddy, told ABC News. “The outlook is bright.”
Relief for consumers stems to a large degree from seasonal fluctuations that take hold every fall, experts said.
A slowdown in travel has eased demand for gas as families have returned from summer vacation and resumed routine driving associated with work and school commutes.
Alongside that softening of demand, refineries have begun shifting toward a less-expensive blend of winter fuel. Refineries contend with fewer regulations from the Environmental Protection Agency in the cooler fall and winter months, allowing for a cheaper blend of fuel.
“This is something we see every year,” Andrew Gross, a spokesperson at AAA, told ABC News.
The decline in prices also owes to a steep drop in the cost of crude oil, the underlying commodity that refineries turn into gas. The price of Brent crude oil has fallen 21% over the past year, and more than 7% over the last month.
A surge in oil production has coincided with a global economic slowdown, which in turn has eased demand for crude as consumers soften spending and companies downshift production. The resulting imbalance between supply and demand has sent prices plummeting, experts said.
“There’s pretty good supply and not much demand,” Timothy Fitzgerald, a professor of business economics at Texas Tech University who studies the petroleum industry, told ABC News.
The decline of gas prices is expected to continue. Gas prices typically drop over the course of the fall as demand wanes and the cheaper blend of winter fuel takes hold.
“Nearly every state east of the Rockies now has some retail outlets selling gas below $3 a gallon and the national average may very well follow suit in October,” said Gross.
Still, the anticipated price relief could be undone by a host of possible disruptions, experts said. Hurricane season could send a storm hurtling toward major refineries in the Gulf of Mexico, taking production offline and pinching gas supply. While an economic surge, perhaps triggered by widely expected interest rate cuts, could prompt an uptick in demand for oil and gas, said de Haan.
“There are some wild cards that we’re watching,” he added. “Outside those factors, there’s not much that could cause a big jump in the price of gasoline.”
By the early part of next year, however, seasonal fluctuations will turn against consumers as demand for gasoline begins to swell, he added.
“Enjoy these seasonal lows,” de Haan said.
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(NEW YORK) -- Borrowers have waited years for a sign of relief from high interest rates for everything from credit card loans to mortgages. The wait may come to an end this week.
Investors widely expect the Federal Reserve to cut interest rates at a meeting on Wednesday. The move would dial back the central bank’s benchmark rate from a 23-year high, reversing some of the rate hikes initiated three years ago in an effort to fight inflation.
Questions, however, remain about the size of the rate cut, what it means for borrowers and how it may impact the 2024 presidential race.
Experts spoke to ABC News about what to know ahead of the potential interest rate cut.
Why is the Fed expected to cut interest rates?
In 2021, the Fed began aggressively raising interest rates in an effort to bring inflation under control. The policy has largely succeeded. Inflation has slowed dramatically from a peak of about 9% in 2022, though it remains slightly higher than the Fed’s target of 2%.
Meanwhile, the job market has slowed. A weaker-than-expected jobs report in each of the last two months has stoked concern among some economists. The unemployment rate has ticked up this year from 3.7% to 4.2%.
Those trends have shifted the Fed's focus away from controlling inflation and toward ensuring a healthy job market.
In theory, lower interest rates help stimulate economic activity and boost employment; higher interest rates slow economic performance and ease inflation.
“The Fed has been very much guided by data,” Anastassia Fedyk, a professor of finance at Haas Business School at the University of California Berkeley, told ABC News. “ Inflation numbers in the last few months have started looking good, and things are not looking so hot in terms of the jobs reports.”
What will the size of the rate cut be?
The chances of an interest rate cut at the Fed’s meeting next week are all but certain, according to the CME FedWatch Tool, a measure of market sentiment.
Market observers are divided nearly down the middle over whether the Fed will impose its typical cut of a quarter of a percentage point, or opt for a larger half-point cut. The tool estimates the probability of a quarter-point cut at 51% and the odds of a half-point cut at 49%.
“There is that much uncertainty because it seems not all Fed officials are of the same opinion,” Gregory Daco, chief economist at accounting firm EY, told ABC News.
Some Fed policymakers appear to prefer a gradual approach to rate cuts in light of easing inflation and a resilient, albeit weakened, labor market, Daco said. By contrast, others seem to favor a large initial cut that would help avert a more severe job market slowdown.
What would a rate cut mean for credit card fees, mortgage rates?
An interest rate cut would mark a major milestone as the Fed shifts toward a lowering of rates and an easing of costs for borrowers, experts said. Still, they added, the initial rate cut would not substantially lessen loan payments.
“In the grand scheme of things, it’s peanuts,” Daco said.
Nevertheless, some loan relief has already emerged in anticipation of a gradual lowering of interest rates over the coming months.
Mortgage rates fell last week to their lowest level since April 2023, Freddie Mac data showed. The 10-year treasury yield, which helps set the level of many consumer loans, has plummeted nearly a percentage point since July.
“This is a sign of a trend that’s going to start, but it’s going to take a lot longer and be milder than an immediate transition,” Fedyk said.
What would a rate cut mean for the November election?
Typically, lower interest rates make borrowing less expensive for businesses and consumers, propelling companies to invest in new projects and everyday people to stretch for bigger purchases. That all should help propel economic growth and buoy consumer optimism.
In turn, an economic surge could benefit the incumbent party, dispelling concern about a recession and improving the livelihoods of everyday people, some analysts previously told ABC News.
However, the benefits of a forthcoming rate cut could prove more limited, since rate moves take hold after a period of delay that can last months, analysts said.
The most recent Democratic presidential candidate who failed to win reelection, Jimmy Carter, lost his bid amid a historic series of rate hikes at the Fed.
A rate cut would deviate from the policy approach taken by the Fed prior to many recent presidential elections, a Reuters analysis found. Policy rates were left unchanged for six to 12 months before the 2020, 2016, 2012 and 2000 U.S. presidential elections, according to Reuters.
To be sure, the Fed says it bases its decisions on economic conditions and operates as an independent government body.
When asked about the 2024 election at a press conference in Washington, D.C., in December, Fed Chair Jerome Powell said, "We don't think about politics."
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(NEW YORK) -- Tens of thousands of Boeing workers have voted to strike after rejecting the proposed contract from the embattled aerospace company -- a move with far-reaching implications for the U.S. economy.
Boeing had reached a tentative agreement earlier this week with the International Association of Machinists and Aerospace Workers, or IAM, the union representing 33,000 workers at Boeing plants in Washington State, Oregon and California.
However, union members rejected the contract agreement on Thursday night with a vote of 94.6%. IAM's members will strike at midnight on Friday after 96% voted for the action.
"The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members," Boeing said in a statement following the strike vote. "We remain committed to resetting our relationship with our employees and the union, and we are ready to get back to the table to reach a new agreement.”
A work stoppage would weaken Boeing as it struggles to recover from a years-long stretch of scandals and setbacks, hamstringing the nation's largest exporter, experts told ABC News. But, they added, workers are frustrated with what they perceive as inadequate compensation and a sense they must sacrifice to make up for the company's mismanagement.
Here's what to know about what's behind the strike and its implications for the U.S. economy:
Why are Boeing workers preparing to strike?
Neither Boeing nor the IAM wants a strike. The workers might carry one out anyway.
The tentative agreement struck this week delivers a 25% raise over the four-year duration of the contract, as well as worker gains on healthcare costs and retirement benefits. The union had sought a 40% pay increase over the life of the deal.
The agreement also features a commitment from Boeing to build its next commercial plane with union labor in Washington state.
Boeing touted the strength of its offer earlier this week. "Simply put, this is the best contract we've ever presented," Stephanie Pope, Boeing Commercial Airplanes president and CEO, wrote in a letter to union members obtained by ABC News.
The union echoed support for the agreement, urging workers to ratify the deal.
"We have achieved everything we could in bargaining, short of a strike. We recommended acceptance because we can't guarantee we can achieve more in a strike," IAM District 571 President Jon Holden, who leads the union local involved in negotiations, told members in a public letter.
In response to ABC News' request for comment, a Boeing spokesperson pointed to a letter sent to union members by CEO Kelly Ortberg.
"I hope you will choose the bright future ahead, but I also know there are employees considering another path -- and it's one where no one wins," Ortberg said.
"For Boeing, it is no secret that our business is in a difficult period, in part due to our own mistakes in the past. Working together, I know that we can get back on track, but a strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together," Ortberg added.
IAM declined to respond to ABC News' request for comment.
Still, the vote indicates that workers are ready to defy the company and the union. For years, West Coast Boeing workers have taken issue with their level of compensation, especially in light of strong company performance and a surge in the cost of living, experts said.
"There are years and years of pent-up frustration among Boeing workers," Jake Rosenfeld, a professor of sociology at Washington University in St. Louis who studies labor, told ABC News. "This is an expression of being completely fed up."
Union members also view themselves as being asked to make sacrifices made necessary by the company's mismanagement, said Henry Harteveldt, a travel industry analyst at Atmosphere Research Group.
In January, a door plug blew out of the company's 737 Max 9 aircraft during an Alaska Airlines flight, prompting a federal investigation. The renewed scrutiny arrived roughly five years after Boeing 737 Max aircraft were grounded worldwide following a pair of crashes in Indonesia and Ethiopia that killed a combined 346 people.
In 2021, after a two-year ban, Boeing 737 Max aircraft were permitted to fly.
Boeing is carrying nearly $60 billion in debt, Pope noted in her letter to union members. The company's share price has plummeted almost 40% since the outset of 2024. Ortberg took over as CEO last month.
"The workers cannot and should not be expected to bear all of the burden of the changes needed at Boeing," Harteveldt said.
"But I don't think Boeing is asking them or expecting them to do that," Harteveldt added. "Boeing has extended what appears to be a very generous offer with substantial wage increases."
What's at stake in a potential Boeing strike?
Boeing, which employs 145,000 U.S.-based workers, is a major U.S. firm with a sprawling network of suppliers, experts said.
The company estimates that it contributes nearly $80 billion to the U.S. economy each year, and indirectly accounts for 1.6 million jobs.
A prolonged strike would weaken production with the potential to slow output, diminish income and trigger layoffs, Harteveldt said.
"There's a risk of a downward spiral," Harteveldt said.
Such a strike would not impact flight activity or down planes, however, since the workers at issue take part in manufacturing new products. That stands in contrast with an averted railroad strike in 2022, which would have halted a sizable share of the nation's cargo trains.
"This wouldn't be as devastating," Rosenfeld said.
Still, he added, a potential strike would hold implications for a signature U.S. firm.
"It would further damage an iconic company that has already had years of setbacks," Rosenfeld said.
Copyright © 2024, ABC Audio. All rights reserved.
(SEATTLE) -- Tens of thousands of Boeing workers are set to cast ballots in a vote Thursday that could potentially trigger a major strike against the embattled aerospace company with far-reaching implications for the U.S. economy.
Boeing reached a tentative agreement earlier this week with the International Association of Machinists and Aerospace Workers, or IAM, the union representing 33,000 workers at Boeing plants in Washington State, Oregon and California.
However, union members could potentially reject the contract agreement, walk off the job and send the two sides back to the bargaining table.
A work stoppage would weaken Boeing as it struggles to recover from a years-long stretch of scandals and setbacks, hamstringing the nation's largest exporter, experts told ABC News. But, they added, workers are frustrated with what they perceive as inadequate compensation and a sense they must sacrifice to make up for the company's mismanagement.
The ratification vote concludes at 9 p.m. ET, and the union will release the results in a press conference soon afterward. If union members reject the contract, they will take a second vote on a strike that could begin as soon as Friday morning.
"This is a very, very high-stakes game of chicken," Henry Harteveldt, a travel industry analyst at Atmosphere Research Group, told ABC News.
Here's what to know about what's behind the strike and its implications for the U.S. economy:
Why are Boeing workers threatening to strike?
Neither Boeing nor the IAM want a strike. The workers might carry one out anyway.
The tentative agreement struck this week delivers a 25% raise over the four-year duration of the contract, as well as worker gains on healthcare costs and retirement benefits. The union had sought a 40% pay increase over the life of the deal.
The agreement also features a commitment from Boeing to build its next commercial plane with union labor in Washington state.
Boeing touted the strength of its offer earlier this week. "Simply put, this is the best contract we've ever presented," Stephanie Pope, Boeing Commercial Airplanes president and CEO, wrote in a letter to union members obtained by ABC News.
The union echoed support for the agreement, urging workers to ratify the deal.
"We have achieved everything we could in bargaining, short of a strike. We recommended acceptance because we can't guarantee we can achieve more in a strike," IAM District 571 President Jon Holden, who leads the union local involved in negotiations, told members in a public letter.
In response to ABC News' request for comment, a Boeing spokesperson pointed to a letter sent to union members by CEO Kelly Ortberg.
"I hope you will choose the bright future ahead, but I also know there are employees considering another path -- and it's one where no one wins," Ortberg said.
"For Boeing, it is no secret that our business is in a difficult period, in part due to our own mistakes in the past. Working together, I know that we can get back on track, but a strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together," Ortberg added.
IAM declined to respond to ABC News' request for comment.
Still, workers may defy the company and the union. For years, West Coast Boeing workers have taken issue with their level of compensation, especially in light of strong company performance and a surge in the cost of living, experts said.
"There are years and years of pent up frustration among Boeing workers," Jake Rosenfeld, a professor of sociology at the University of Washington who studies labor, told ABC News. "This is an expression of being completely fed up."
Union members also view themselves as being asked to make sacrifices made necessary by the company's mismanagement, said Harteveldt, of Atmosphere Research Group.
In January, a door plug blew out of the company's 737 Max 9 aircraft during an Alaska Airlines flight, prompting a federal investigation. The renewed scrutiny arrived roughly five years after Boeing 737 Max aircraft were grounded worldwide following a pair of crashes in Indonesia and Ethiopia that killed a combined 346 people.
In 2021, after a two-year ban, Boeing 737 Max aircraft were permitted to fly.
Boeing is carrying nearly $60 billion in debt, Pope noted in her letter to union members. The company's share price has plummeted almost 40% since the outset of 2024. Ortberg took over as CEO last month.
"The workers cannot and should not be expected to bear all of the burden of the changes needed at Boeing," Harteveldt said.
"But I don't think Boeing is asking them or expecting them to do that," Harteveldt added. "Boeing has extended what appears to be a very generous offer with substantial wage increases."
What's at stake in a potential Boeing strike?
Boeing, which employs 145,000 U.S.-based workers, is a major U.S. firm with a sprawling network of suppliers, experts said.
The company estimates that it contributes nearly $80 billion to the U.S. economy each year, and indirectly accounts for 1.6 million jobs.
A prolonged strike would weaken production with the potential to slow output, diminish income and trigger layoffs, Harteveldt said.
"There's a risk of a downward spiral," Harteveldt said.
Such a strike would not impact flight activity or down planes, however, since the workers at issue take part in manufacturing new products. That stands in contrast with an averted railroad strike in 2022, which would have halted a sizable share of the nation's cargo trains.
"This wouldn't be as devastating," Rosenfeld said.
Still, he added, a potential strike would hold implications for a signature U.S. firm.
"It would further damage an iconic company that has already had years of setbacks," Rosenfeld said.
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