Fourteen ports along the U.S. East Coast and Gulf Coast were preparing for a strike on Monday that could drag down the U.S. economy ahead of the presidential election.

The United States Maritime Union (USMX), which represents port operators and shipping companies, tried to advance negotiations with the International Longshoremen's Association (ILA) at the last minute.

USMX announced late Monday that it had exchanged offers with the ILA. However, unless more concrete progress is made, tens of thousands of dockworkers could still strike when their six-year contract expires after midnight.

This will be the ILA's first strike since 1977, directly affecting approximately 45,000 ILA members in 14 major U.S. ports including New York/New Jersey, Boston, Philadelphia, Savannah, New Orleans and Houston.

USMX said in a statement that it had bargained with the union over wages over the past 24 hours, adding: "We hope this will allow us to fully resume collective bargaining on the other outstanding issues and work towards reaching an agreement."

A source familiar with the negotiations told AFP that the proposal described by USMX had been rejected by the ILA. When asked about the statement, an ILA representative told AFP he had nothing to add.

Is a strike inevitable?

USMX said late on Monday that its new proposal would "raise wages by nearly 50%, triple employer contributions to employee retirement plans, strengthen our health care options, and preserve the current language on automation and semi-automation."

According to media reports, the ILA is demanding a 77% salary increase within six years.

USMX also said it had requested an extension of its current contract to allow for further negotiations.

"While we encourage both sides to come to the bargaining table and reach an amicable agreement, all signs indicate that a strike will occur," Port Authority Executive Director Rick Cotton said at a news conference Monday. New York officials have sought to assure consumers that they will not lose access to food and other necessities.

New York Gov. Kathy Hochul said port officials were scrambling to clear as much as possible before the upcoming shutdown.

Other ports, such as New Orleans and Savannah, have extended their hours in recent days ahead of the deadline.

Dockworkers have been providing essential services during the pandemic, so unions are urging the government to protect workers from automation-related job losses and demanding significant wage increases.

The ILA said Monday that shipping interests are engaging in a "shameful" effort "to rake in billions of dollars in profits at the behest of U.S. ports and ILA longshoremen."

Economic losses and political consequences

The two sides in the labor dispute have been deadlocked over issues such as wages and port automation. The strike could have a domino effect on container supply, storage, rail and truck cargo and food supplies.

Oxford Economics estimates that the strike will reduce U.S. gross domestic product (GDP) by $4.5 billion to $7.5 billion per week. Analysts say the hit to the overall economy will depend on how long the strike lasts. A JPMorgan Chase analysis estimates that the strike will cost the U.S. economy up to $5 billion a day.

“The port strike will paralyze U.S. trade and push up prices just when consumers and businesses are beginning to unwind inflation,” said Erin McLaughlin, senior economist at the Conference Board. “There is no easy Plan B. While shippers have begun to shift some cargo to the West Coast, the capacity for that alternative is limited.”

"The Suez Canal is closed, the Red Sea is closed. If there's a strike on the East Coast, that's going to be closed, too. Guess what? Prices are going to go through the roof," warned John Catsimatidis, chairman and CEO of Gristedes and D'Agostino supermarkets.

Biden can invoke the law under the Taft-Hartley Act to require workers to enter an 80-day cooling-off period. But Biden said Sunday he would not interfere in labor negotiations, citing his support for collective bargaining rights.

Catsimatidis believes the situation for the Biden administration and the Harris campaign couldn't look any worse. "This is not going to be a good thing for Vice President Harris because she depends on lower prices," he said. "Biden should at least prevent the strike before the election."

Fed official: Port strike could disrupt supply chain

Potential U.S. port strikes have also caught the attention of the Federal Reserve. Chicago Fed President Goolsbee said on Monday that he would be concerned if the dockworkers' strike, expected to begin on Tuesday, continued because it could affect the supply chain.

"Any negative supply shock, in our terms, that raises the cost of doing business and creates supply shortages, those are things we have to deal with, and the impacts are never good," Goolsbee told Fox Business Network in an interview on Monday.

As negotiations have stalled, longshoremen are threatening to strike at ports along the East Coast and Gulf of Mexico, which handle half of all U.S. trade. That could disrupt the flow of goods, affecting prices and the broader economy, causing supply chain disruptions similar to those seen during the coronavirus pandemic.

Policymakers just started cutting rates earlier this month, which Goolsbee said was appropriate as “warning indicators” emerged in the labor market. Even so, he said employment and inflation were nearly in line with the Fed’s goals and overall economic growth was good.

Economists and investors are now looking to the Fed’s next meeting on Nov. 6-7, and the economic data that follows, to predict whether officials will deliver another aggressive 50 basis point rate cut or revert to more normal 25 basis point cuts.

Goolsbee declined to say whether he would support a smaller or larger rate cut at that meeting, instead stressing that the process of getting rates down to “normal” levels, which could happen over a year or more, is more important.

Article forwarded from: Jinshi Data