Expert: Port strike could have ‘devastating consequences’ for consumers | Real Time Headlines

one dockworkers strike Huge problems expected at U.S. eastern and Gulf coast seaports Global supply chain and economy. American consumers may pay the price.

The International Longshoremen’s Association (ILA) went on strike earlier on Tuesday 14 major ports Wage growth and the use of automation. In summary, ports threatened by strikes deal with $3 trillion Each year in the U.S. annual international trade, according to Analysis by The Conference Board.

“At a critical moment in our nation’s economic recovery, disruption of this magnitude will have devastating consequences for American workers, their families and local communities,” Matthew Shea, president and CEO of the National Retail Federation, said in a statement. statement Tuesday. As the retail industry’s largest trade association, supply chain dynamics are a critical issue, especially ahead of the holiday season.

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“American businesses, workers and families rely on the seamless flow of goods at these ports, and this strike will ultimately result in consumers paying higher prices due to limited supply and increased demand for imported goods,” Shea said.

“After more than two years of runaway inflationary pressures and during the recovery from Hurricane Helene, this strike will cause further hardship,” he said.

Overall, the U.S. economy has made steady progress in lowering inflation, but for the most part, price increases have simply slowed — Don’t fall straightforward.

this consumer price indexa key inflation gauge that tracks average prices for a broad basket of consumer goods and services, 2.5% increase August compared with the same period last year, according to the Bureau of Labor Statistics. This is from Peak of the pandemic era In June 2022 it was 9.1%.

ITR Economics economist Lauren Saidel-Baker said commodity costs are well controlled, with commodity prices relatively stable and transportation costs low (at least until recently).

However, “port strikes could lead to a new round of commodity inflation,” she said.

The standoff between the ILA, which represents about 45,000 port workers, and the United States Maritime Union (USMX) also comes nearly four years before the pandemic Chaotic global supply chains.

At the time, items weren’t arriving on shelves as quickly as consumers would like, which drove up prices.

Seidel-Baker said strikes at U.S. ports could have a similar effect, “creating a scenario reminiscent of a pandemic-era logistics crisis.”

She said while shortages and delays were likely, the biggest economic impact would be on prices, and the longer the strike lasted, the more likely inflationary consequences would be.

“The most important thing here is that duration amplifies the impact,” Lisa DeNight, managing director of national industrial research at commercial real estate firm Newmark, told CNBC.exchange” on Monday.

During a short-term strike, “companies with safety stocks may cushion the initial disruption, but perishable goods will be affected almost immediately,” said Amir Mousavian, a professor of supply chain management at the University of New England’s business school.

In this case, some grocery store Among the first items to rise were imported coffee, bananas and frozen foods.

“They don’t have a long shelf life, which means the reserves are low,” Mousavian said.

Mousavian said if the strike takes longer to resolve, businesses will need to find alternative shipping routes and the costs could be higher, which could lead to higher prices for other goods, including medicines, clothing and cars.

Mousavian said: “If this situation continues to drag on, it will affect various industries and will be unavoidable for most companies.”

“It’s the consumer who ultimately pays the price,” he added.

Mousavian added that the timing of the strike was particularly concerning, ahead of the holiday shopping season and the U.S. presidential election, and after the Federal Reserve cut interest rates for the first time in four years. welcome message For Americans struggling to keep up with the rising cost of living.

“A prolonged strike could reverse these gains, force the Fed to reconsider its economic strategy and potentially reintroduce more restrictive measures,” Mousavian said.

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