According to a report by Reuters, Austan Goolsbee, the Chairman of the Federal Reserve Bank of Chicago (Fed Chair), stated on Thursday (October 3) that retailers and manufacturers have stockpiled about two weeks’ worth of goods to cope with the ongoing strike by American dock workers. However, if this labor dispute continues, the resulting disruption in the supply chain could lead to rising prices.
Goolsbee told Chicago’s public radio station WBEZ, “Initially it is inconvenient, and the longer it goes, the worse it gets.” He further added that the strike may mean “some things may increase in price.”
The strike organized by the International Longshoremen’s Association has entered its third day, impeding the unloading of container ships on the U.S. East Coast and Gulf Coast, with dozens of ships anchored outside major ports waiting, potentially causing shortages of goods.
Economists estimate that the strike is costing the U.S. economy billions of dollars per day.
Goolsbee pointed out that compared to the over $20 trillion U.S. economy, “it’s not an overwhelming number. It’s not that number. This is not a recession.”
The Chicago Fed Chair also noted that the U.S. central bank has largely brought inflation rates down to target levels and needs to “substantially” cut rates in the next 12 months, or else face the risk of economic and labor market overheating.
“We need to get rates back to normal, like you in your bathtub… if the water in your bathtub is too hot, you add cold water. But if you think the tub and water is the situation you want, then you turn off the cold, otherwise, you know what’s going to happen,” he described.
Last month, the Fed lowered its policy rate to a range of 4.75%-5.00%, with most policymakers at the central bank expecting further rate cuts throughout this year and 2025.