Longshoremen began a strike Tuesday across the eastern United States and Gulf Coast.
A strike by about 45,000 workers could “hurt economic growth and push up inflation,” but only if the strike is prolonged, said Morgan Stanley economist Diego Anzoategui. he wrote in a note to clients on Wednesday.
“Although rail services have already been suspended and freight rates have temporarily increased, we believe the impact on transportation should be reasonably limited unless there is a long-term suspension of operations.” Anzoategui wrote.
He added that food and beverages would see the biggest price increases from the strike.
Additionally, strikes can affect the measurement of economic indicators. Goldman Sachs’ economics team estimates that the 10-day strike could reduce gross domestic product (GDP) by 0.2 percentage points in the fourth quarter. On the other hand, if workers continue their strike until October 12, it is likely to have a negative impact on October’s employment statistics.
“If the strike continues into the base period, it would directly impact October payroll growth by 45,000 yen,” Goldman Sachs economists Elsie Penn and Jessica Linders wrote in a note to clients on Tuesday. “The impact will be reversed after the strike ends.” night.
Given the Fed’s focus on the slowdown in the labor market, there is debate among economists about whether a weak October employment report due to the strike will prompt the Fed to cut rates by 50 basis points.
Morgan Stanley’s economics team argued that the Fed “tends to focus on short-term fluctuations due to strikes.” But Neil Dutta, head of economics at Renaissance Macro, said the big hit to October’s jobs report from both the strike and the recent hurricanes in the Southeast was too much to pass up, given other signs of a slowdown in the labor market. He insisted that it was difficult.
“Certainly, these problems may be temporary and will show up more in the Business Survey than in the Household Survey, but on the balance of risks, I don’t think the Fed should ignore them.” Datta wrote. “Why take a chance when inflation has been resolved?”
