Transitory, but for How Long?

Marc Zabicki:

Simply stated, it's our job to analyze the global economy and its potential impact on financial markets and client portfolios. It's a straightforward responsibility, but oftentimes, not easy. In this latest edition of LPL Street View, we offer a brief look into the just launched Longshoremen strike and its potential effect on a still stable, but weakening, U.S. economy. And we raise our concern for those impacted by Hurricane Helene. As of midnight, on October 1, members of the International Longshoremen Association launched a strike that will likely affect shipping up and down the U.S. East Coast, as well as points in the Southeast and also Texas. The action has already affected freight rates in the West Coast and could create further supply chain issues as well as cause price increases for a multitude of goods, including food. This is the first East Coast and Gulf Coast Longshoremen strike since 1977, and that event lasted seven weeks.

Marc Zabicki:

This current event is expected to negatively impact the U.S. economy, and according to our Chief Economist, Dr. Jeff Roach, the key variable on assessing the situation will be dependent on the length of the Longshoreman's walkout. A prolonged strike plus the hurricane effects across Florida and the southeast will be a lot for the economy to handle. The combination of events is likely to weigh further on the economy in the short run, and we have already seen the U.S. economy begin to show signs of more tenuous consumer demand and a bit of softening in the jobs market. Dr. Roach has also highlighted this strike could impact the extent and timing of further rate cuts as the Fed will be gauging the strikes impact on inflation and thus, near-term policy decisions. This is something our asset allocation committee will be analyzing closely as well. Historically, labor strikes have a transitory impact on the economy and the destructive effects of weather events are often followed by increased economic demand as communities rebuild.

Marc Zabicki:

As a resident of both North Carolina and South Carolina, I certainly wish nothing but the best for my neighbors in those states and surrounding states as they engage in recovery and rebuild efforts. The Longshoremen strike and the unfortunate weather circumstances across the southeast are indeed concerning on multiple levels. However, as we stand here today, we believe there is nothing investors should be doing in terms of changing portfolio allocation course as a result of these events. We will scrutinize further developments around the strike and hurricane recovery efforts, and certainly update you on potential impacts to your portfolio. Thanks for listening. Importantly, take care and as always, allocate wisely.