Loaded containers stacked on a cargo ship sailing in a canal in the Suez Canal, Red Sea, Egypt on January 20, 2017.
Camille Delbos | Corbis news | Getty Images
WASHINGTON — The strong December jobs report released Friday capped a year of economic success for the Biden administration. Now global shipping delays due to attacks on cargo ships in the Red Sea threaten to weaken the momentum.
The Labor Department reported that employers added 216,000 jobs in December, exceeding economists' estimates by over 40,000 jobs. The unemployment rate also remained constant at 3.7%.
But Danish shipping company Maersk announced it would continue to withdraw its fleet from the Red Sea indefinitely due to ongoing attacks by Houthi rebels in the region. Maersk was one of several shipping companies that began diverting more than $200 billion worth of trade flows from the Suez Canal in December.
White House officials are aware of the risk that delivery halts could trigger a domino effect within the U.S. supply chain, which only recently appeared to be recovering from the impact of COVID-19.
“Given what has happened during the pandemic, we are very sensitive to the impact of supply chains and logistical bottlenecks on the economy,” Jared Bernstein, chairman of the White House Council of Economic Advisers, said in a call with reporters on Friday.
The early years of the pandemic saw lengthy closures at shipping ports, preventing around $24 billion worth of goods from finding their way into the U.S. market.
Lael Brainard, director of the National Economic Council, said the delays so far have had a “minimal impact” on energy costs.
“They've actually seen very little impact on prices at the pump,” Brainard told CNBC's “Squawk on the Street” on Friday, although she called Maersk's actions “unacceptable.”
Brainard did not mention the potential impact on global manufacturing and consumer goods if the Red Sea remains too dangerous for major shipping lines.
The current delays have already affected several companies that sell products in the United States, including Sweden-based Ikea and British home appliance maker Electrolux.
Biden's national security team is working on this “with a broad coalition of partners and in close contact with the shippers,” said Brainard.