Market Commentary

Don’t Panic Over Port Strike

By Rob Sigler, MBA

October 2, 2024

We have started to receive some nervous calls over the potential impact of the East and Gulf Coast dockworkers strike.  To be sure, this is meaningful for the US economy.  The 14 largest ports affected by the strike collectively handle 25% of US goods imports and 27% of goods exports.  That equates to 2.8% of US GDP on the import side and 1.9% of US GDP on the export side of the equation.  Could this cause a dip in payrolls, decrease the availability of goods, put further pressure on the manufacturing sector, and cause inflationary pressures?  The answer is yes, however, let us put it in context.  As you can see in the following Goldman Sachs chart, most of these strikes last a week or less.

Goldman estimates a 10-day strike would cost the US economy 0.2%.  A strike lasting double that length would roughly double the impact and would cause a payroll dip of approximately 45k workers.  That would be easily identified in the dataset, and thus we believe investors would treat it as a one-time item.  We believe there is intense pressure on the current political administration to avoid a protracted strike which would imperil growth or stimulate inflation.  That alone should be a catalyst to resolve this situation quickly.  Our bottom line is this.  Strikes are transitory and the stock market treats them as such.  Don’t panic.

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