Prolonged Ports Strike Could Pose Supply-Chain Risks
The strike could disrupt the movement of goods and impact prices and the broader economy, similar to supply-chain disruptions during the pandemic.
Federal Reserve Bank of Chicago President Austan Goolsbee said he’d be concerned if the dockworkers strike that started this morning were to drag on, as it might impact supply chains. “Anything that’s a negative supply shock, in our language—that’s going to raise the cost of doing business and lead to shortages—is something that we’re just going to have to deal with, and the impacts are never good,” Goolsbee said Monday in an interview on Fox Business.
U.S. dockworkers at ports on the East and Gulf coasts—which have the combined capacity to handle as much as half of all U.S. trade volumes—went on strike this morning amid stalled talks with the group representing ocean carriers and port terminal operators. The strike could disrupt the movement of goods and impact prices and the broader economy, similar to supply-chain disruptions during the pandemic.
Policymakers started cutting interest rates last month, which Goolsbee said was appropriate as “cautionary indicators” emerge in the labor market. Even so, he said, employment and inflation are pretty much at the Fed’s targets and the economy overall is growing well.
Economists and investors are now looking to the Fed’s next meeting on November 6 and 7—and the economic data releases leading up to it—to forecast whether officials will deliver another large half-point cut or revert to a more normal quarter-point reduction.
Goolsbee declined to say whether he supports a smaller or larger cut, stressing instead that it’s important to consider the process as a whole to lower rates to “normal,” which could take place a year or more.
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