Containers rest atop a cargo ship moving through the canal in the Suez Canal, Red Sea, Egypt January 20, 2017.Thank you for reading this post, don't forget to subscribe!
Camille Delbos | Corbis News | getty images
WASHINGTON — The strong December jobs report released Friday capped a year of economic wins for the Biden administration. Now, global shipping delays caused by attacks on cargo ships in the Red Sea threaten to slow that pace.
The Labor Department reported that employers added 216,000 jobs in December, 40,000 more jobs than economists expected. The unemployment rate also remained stable at 3.7%.
But Danish shipping company Maersk announced it would continue to withdraw its fleet from the Red Sea indefinitely amid ongoing attacks by Houthi rebels in the region. Maersk was one of several shipping companies that began handling more than $200 billion worth of trade through the Suez Canal in December.
White House officials are well aware of the risk that the shipping holdup could trigger a domino effect within the US supply chain, which has recently appeared to be recovering from the effects of COVID-19.
“Given what’s happened during the pandemic, we are very sensitive to the impact of supply chains and logistics disruptions on the economy,” Jared Bernstein, chairman of the White House Council of Economic Advisers, said in a call with reporters on Friday.
Shipping ports experienced long backups in the first years of the pandemic, preventing about $24 billion worth of goods from reaching the U.S. market.
National Economic Council director Lael Brainard said that so far, the delay has had “minimal impact” on energy costs.
“You’ve actually seen very little impact on prices at the pump,” Brainard said on CNBC’s “Squawk on the Street” on Friday, though he called Maersk’s actions “unacceptable.”
Brainard did not mention the potential repercussions for global manufacturing and consumer goods if the Red Sea remains too dangerous for major shipping lines to enter.
The current delays have already affected several companies selling products in the US, including Sweden-based Ikea and British appliance firm Electrolux.
Biden’s national security team is “working with a broad coalition of partners and in close contact with shippers,” Brainard said.