What happened

Shares of Uber (UBER -0.32%) were falling today, trending with a broad sell-off in the market as stronger-than-expected economic data triggered expectations for more aggressive rate hikes next year from the Federal Reserve.

As a transportation company, Uber's business is closely connected to the global economy, and the company is also dealing with its own labor challenges after drivers in New York City went on strike earlier this week.

As of 11:27 a.m. ET, Uber stock was down 3.8%, while the Nasdaq had lost 2.6%.

A person looking at an Uber app.

Image source: Uber.

So what

Stocks fell broadly as the final estimate of third-quarter GDP came in at 3.2% this morning, above estimates at 2.9%, showing economic growth was solid last quarter in spite of the Federal Reserve's efforts to cool it off. Additionally, unemployment claims remained low last week, a sign the labor market continues to be tight. Fed Chair Jerome Powell had said before that he believed rising rates could cause some pain in the labor market, and some economists believe that rising unemployment will be necessary to bring the inflation rate down to the Fed's goal of 2%.

Positive economic data boosts expectations of more aggressive monetary policy from the Fed, as well as the potential for a deep recession, which would impact demand for Uber's services.

Separately, Uber is also sensitive to the labor market, as the strike in New York shows where drivers have been pushing for higher rates. In New York, Uber sued the Taxi and Limousine Commission over approving a pay increase for Uber and Lyft drivers, saying it would cost an additional $21 million to $23 million a month and lead to fare increases.

A judge ordered an injunction on the raises, leading some Uber drivers to go on strike on Monday.

Now what

Uber has taken some steps to move toward profitability and is profitable on an adjusted EBITDA basis. However, investors still seem skeptical of the stock, as it's down nearly 50% from its IPO price in 2022.

The prospect of a global recession next year and Uber's ongoing regulatory woes are a reminder of the wide range of challenges the company still faces, and it's clearly a loser from a tight labor market. While the New York strike won't have a material effect, the issues are worth watching, as reining in driver and rider incentives has been a key tactic for Uber as it seeks to boost its profitability.