Fed’s Goolsbee Says Prolonged Ports Strike Poses Supply Risks

(Bloomberg) -- Federal Reserve Bank of Chicago President Austan Goolsbee said he’d be concerned if a dockworkers strike — which is expected to start Tuesday — drags on as it may impact supply chains.

“Anything that’s a negative supply shock, in our language, that’s going to raise the cost of doing business and lead to shortages, is something that we’re just going to have to deal with and the impacts are never good,” Goolsbee said Monday in an interview on Fox Business. 

US dockworkers at ports on the East and Gulf coasts — which have the combined capacity to handle as much as half of all US trade volumes — are less than 24 hours away from striking amid stalled talks with the group representing ocean carriers and port terminal operators. That could disrupt the movement of goods and impact prices and the broader economy, similar to supply-chain disruptions during the pandemic.

Policymakers started cutting interest rates earlier this month, which Goolsbee said was appropriate as “cautionary indicators” emerge in the labor market. Even so, he said employment and inflation are pretty much at the Fed’s targets and the economy overall is growing well.

Economists and investors are now looking to the Fed’s next meeting on Nov. 6-7 — and the economic data releases leading up to it — to forecast whether officials will deliver another large half-point cut or revert to a more normal quarter-point reduction. 

Goolsbee declined to say whether he supports a smaller or larger cut at that meeting, stressing instead that it’s more important to consider the process as a whole to lower rates to “normal,” which could take place over a year or more.

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