The strike by port workers along the East and Gulf coasts of the United States will provide a modest hit to GDP of a little more than 0.1 percentage points per week, or roughly $4.3 billion in lost exports and imports.
The strike will provide a modest hit to GDP of a little more than 0.1 percentage points per week, or roughly $4.3 billion in lost exports and imports.
If sustained, that impact would result in roughly a half percentage point shaved from GDP in the fourth quarter.
With the American economy growing at a 3% annual rate, we do not expect the strike to derail the domestic economy.
Because West Coast ports can absorb much of the redirected economic activity, the impact on the economy and inflation will be modest at best in the short term.
Of the ports affected by the strike, our look at American trade conditions implies that approximately $1.3 billion per day in exports and $3 billion per day in imports will be affected.
Read more of RSM’s insights on supply chains, including how proactive management can mitigate disruptions.
Those totals capture agricultural exports of roughly $30 million per day and $115 million per day in food exports.
The larger hit to the economy will arrive in the form of lost auto and container trade of $40 billion in exports and $91 billion exports, or 24% of total goods exports and 32% of imports.
American supply chains have fully recovered from pandemic-era disruptions, and the New York Federal Reserve’s supply chain index implies that supply chain pressures are modest at best and will pose little to no drag on economic conditions. That will rise if the strike continues.
Port operators on the West Coast learned to operate under severe duress following the shocks of the pandemic.
We think that this will partially mitigate some of those factors that will hurt trade volumes during the labor action. We think that the overall impact may be somewhat less than our initial estimates and will largely be local rather than national.
With about 45,000 workers on strike, the greater economic impact will be in local furloughed workers that may double that number.
While those workers will not affect the upcoming September jobs report, to be released Friday, it will certainly affect the October employment estimate.
For this reason, the upcoming Bureau of Labor Statistics jobs report will be the last clean look at the labor market before the presidential election.
This will push economic activity further into the current quarter or next year should the strike persist.
The major industries affected by this action will be local transportation and warehousing, and auto imports. Agricultural goods, coal and petroleum figure to see the greatest short-term impact.
In the near-term, firms affected by the strike will face thinner margins as they eat higher transportation costs.
