Congestion at West Coast Ports Lowered Economic Growth by 0.2 Percentage Points, Fed Says
The Federal Reserve Bank of New York said congestion at West Coast ports lowered U.S. economic growth by 0.2 percentage points in the first quarter, the Wall Street Journal reported.
The decline is equal to the amount gross domestic product shrank in the first three months of the year, the paper reported.
The West Coast ports, responsible for 43.5% of U.S. trade, had been operating at reduced capacity from late October to late February as dockworkers slowed cargo during negations for higher pay.
The Port of Los Angeles, the nation’s busiest, handled 29% less cargo in January 2015 compared with January 2014, and volumes were down 19% in neighboring Long Beach, the second-busiest.
California citrus fruit bound for Asia spoiled on the docks, and Mardi Gras beads destined for New Orleans instead languished on cargo ships off the Southern California coast, Bloomberg News reported.
Carmakers flew in vital components at more than 10 times the cost of shipping them, and Japanese McDonald’s restaurants rationed french fries because of a shortage of Idaho potatoes.
The Fed estimates that in the first quarter West Coast export and import growth dropped 14 to 20 percentage points, relative to other U.S. ports, according to the paper.
“The dispute had the most bite in the first quarter, with imports and exports through the West Coast ports plunging,” Federal Reserve Bank of New York wrote in a blog post July 2, though they added that the strong dollar and weak foreign demand likely contributed to that decline.
