United Airlines said Tuesday that it is starting a $1.5 billion share buyback as the carrier reported higher-than-expected earnings for the busy summer travel season and forecast strong results for the last three months of the year.

United expects to earn an adjusted $2.50 to $3.00 a share in the fourth quarter, compared to $2.00 a share a year earlier and the $2.68 analysts polled by LSEG estimated.

Here is what United reported for the third quarter compared with what Wall Street expected, based on average estimates compiled by LSEG:

• Earnings per share: $3.33 adjusted vs. $3.17 expected
• Revenue: $14.84 billion vs. $14.78 billion expected

The share buyback would be United’s first since before the Covid-19 pandemic. U.S. airlines received more than $50 billion in government aid during the pandemic travel slump that prohibited share repurchases and dividends, though airlines were still fighting for financial stability.

Southwest Airlines announced a $2.5 billion share repurchase program last month.

“Like other leading airlines and companies, we are initiating a measured, strategic share repurchase program,” United CEO Scott Kirby said in a note to staff on Tuesday. “Importantly, my commitment to you is that investing in our people and our business will always be my top priority even while we institute this share repurchase program.”

For the third quarter, United posted revenue of $14.84 billion, up 2.5% from a year earlier and above analysts’ estimates. It reported net income of $965 million, down 15% from a year ago.

United said domestic unit revenue was positive in August and September compared to last year as airlines trimmed a glut of flights that were pushing down fares. United expanded capacity by 4.1% in the third quarter. The carrier said corporate revenue rose 13% in the quarter; premium revenue, including business class tickets, rose 5%; and sales from its no-frills basic economy tickets were up 20%.

The airline last week unveiled a far-flung expansion for next year that included new flights to Mongolia, Senegal, Spain and Greenland in a chase for international travel demand.

Adjusting for one-time items, United reported earnings per share of $3.33, topping Wall Street forecasts and United’s estimate in July of $2.75 to $3.25 a share.

Airline executives will hold a call with analysts at 10:30 a.m. ET on Wednesday and will likely face questions about demand for the end of the year and into 2025, as well as production problems at Boeing, where most factories have been idled during a more than monthlong machinist strike.

It’s been just over a month since more than 30,000 Boeing machinists walked off the job after overwhelmingly voting down a tentative contract. Costs and tensions have only risen since then.

The strike is adding to pressure on Boeing’s new CEO, Kelly Ortberg, who was brought in over the summer to solve the plane maker’s various troubles. The strike, which S&P Global Ratings estimates costs Boeing more than $1 billion a month, bookends an already difficult year that started with a near-catastrophic blowout of a 737 Max door plug and comes six years after the first of two fatal Max crashes put the storied manufacturer in constant crisis mode.

The union and company remain at an impasse, and airplane production at factories in the Seattle area and other locations has been idled, depriving Boeing of cash. Boeing last week pulled a sweetened contract offer that the union had rejected, saying it wasn’t negotiated.

Boeing officials had been upbeat to airline customers about getting to a deal in the weeks before the original vote, according to people familiar with the matter who spoke on the condition of anonymity because the conversations were private.

But that optimism didn’t pan out, as workers on Sept. 13 voted 95% against an initial tentative labor deal.

“They’ll have to increase their offer. There’s no doubt about that,” said Harry Katz, a professor who studies collective bargaining at Cornell University’s School of Industrial and Labor Relations. He said one of the union’s demands, a return to a pension plan, is unlikely, however, and estimated the strike could last two to five more weeks.

The process of ending strike has turned more fraught, with federally mediated talks breaking down midweek.

Boeing on Thursday said it filed an unfair labor practice charge with the National Labor Relations Board that accused the International Association of Machinists and Aerospace Workers union of negotiating in bad faith and misrepresenting the plane makers’ proposals.

Late Friday, Jon Holden, president of the striking workers’ union, IAM District 751, pushed for a return to negotiations.

“CEO Ortberg has an opportunity to do things differently instead of the same old tired labor relations threats used to intimidate and crush anyone that stands up to them,” he said in a statement. “Ultimately, it will be our membership that determines whether any negotiated contract offer is accepted. They want a resolution that is negotiated and addresses their needs.”

Boeing’s unionized machinists are not receiving paychecks and lost their company-backed health insurance at the end of September. However, unlike during the last Boeing factory strike in 2008, there is more contract work in the Seattle area to help workers fill the gaps. A union message board posts job opportunities like driving for food delivery services and warehouse work.

Boeing will cut 10% of its workforce, or about 17,000 people, as the company’s losses mount and a machinist strike that has idled its aircraft factories enters its fifth week. It will also delay the launch of its new wide-body airplane.

The manufacturer will not deliver its still-uncertified 777X wide-body plane until 2026, putting it some six years behind schedule, and will stop making commercial 767 freighters in 2027 after it fulfills remaining orders, CEO Kelly Ortberg said in a staff memo Friday afternoon.

Boeing expects to report a loss of $9.97 a share in the third quarter, the company said in a surprise release Friday. It expects to report a pretax charge of $3 billion in the commercial airplane unit and $2 billion for its defense business.

In preliminary financial results, Boeing said it expects to have an operating cash outflow of $1.3 billion for the third quarter.

“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said. “Beyond navigating our current environment, restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.”

The job and cost cuts are the most dramatic moves to date from Ortberg, who is just more than two months into his tenure in the top job.

He was tasked with restoring Boeing after safety and manufacturing crises, but the labor strike has been the biggest challenge yet for Ortberg. Credit ratings agencies have warned the company is at risk of losing its investment-grade rating, and Boeing has been burning through cash in what company leaders hoped would be a turnaround year.

S&P Global Ratings said earlier this week that Boeing is losing more than $1 billion a month from the strike, which began Sept. 13 after machinists overwhelmingly voted down a tentative agreement the company reached with the union. Tensions have been rising between the manufacturer and the union, and Boeing withdrew a contract offer earlier this week.

On Thursday, Boeing said it filed an unfair labor practice charge with the National Labor Relations Board that accused the International Association of Machinists and Aerospace Workers of negotiating in bad faith and misrepresenting the plane makers’ proposals. The union had blasted Boeing for a sweetened offer that it argued was not negotiated with the union and said workers would not vote on it.

The job cuts, which Ortberg said would occur “over the coming months,” would hit just after Boeing and its hundreds of suppliers have been scrambling to staff up in the wake of the Covid-19 pandemic, when demand cratered.

New Lebanon, Ohio, population 3,756, has three dollar stores, a Groceryland grocery store, a few fast-food restaurants, a public library branch, and a spirit-filled school system. What it doesn’t have is a pharmacy.

As part of Rite Aid’s bankruptcy filing in October 2023, the chain announced it was closing 800 stores, with Ohio especially hard hit, at 180 closings slated largely in struggling small towns or Rust Belt cities. According to Rite Aid’s website, the chain currently has 1,700 locations, down from the 2,111 reported at the time of bankruptcy. The company has stated it will emerge from bankruptcy with about 1,300 stores.

New Lebanon’s Rite Aid closed in September.

“My community needs a pharmacist. It is concerning to me that the residents don’t have one here,” said New Lebanon Mayor David Nickerson.

Some smaller towns near New Lebanon have their own pharmacies, but even those are a 15-minute drive away. New Lebanon’s Rite Aid prescriptions were transferred to a Walgreens 30 minutes away in Dayton.

Nickerson, who was just elected last year and has a military background, recently found himself walking the Walgreens parking lot in Dayton. He even strolled around the back of the building at night, doing a thorough inspection to tell his constituents he had done his due diligence and made sure it was a safe place to go. But even coming away convinced that Walgreens was safe and clean won’t be enough for some of New Lebanon’s residents.

“We have many elderly residents who are uncomfortable going that far with the traffic and unknown area,” Nickerson said.

Getting a prescription filled in New Lebanon, which sits on a busy thoroughfare leading to Dayton, wasn’t always so difficult.

“Before we moved to New Lebanon two years ago, there were three pharmacies,” said Joyce Dingman. “Last year New Lebanon’s CVS closed, and now Rite Aid is closing, leaving us with none.” 

She and her husband will head to a town 30 minutes away to get prescriptions filled at a Kroger pharmacy.

 A spokesman for Rite Aid confirmed the outsized impact the closings are having on Ohio.

“Nearly all our stores in Ohio will be closing by the end of September as part of our recent Chapter 11 process to create a stronger, healthier company,” the spokesman said, adding that there would only be four Rite Aids remaining in Ohio. There were over 140 before the latest round of closures.

New Lebanon, though, is hardly alone in its struggle to hold on to a pharmacy.  Experts say the retail pharmacy model has been squeezed by complicated and sometimes lower reimbursement rates for medication while competition for sales of candy and paper towels, items that used to pad profits, has grown more fierce.   

The pharmacy squeeze

At a time when the federal government is suing the primary drug market’s middlemen, the pharmacy benefit managers — with the Federal Trade Commission alleging inflated prices on drugs like insulin — some are pointing the finger at the PBMs for the pharmacy deserts.

Miranda Rochol, senior vice president of provider solutions at healthcare technology company Prescryptive Health — who worked her way up in the business, starting as a pharmacy technician before moving to Walgreens health technology team — says the PBMs are largely to blame for the current problems in the industry. “PBMs can steer patients into their own pharmacies, drive profit to their pharmacies, and under-pay community pharmacies,” she said.

In June, the FTC issued a scathing report about PBMs and the “squeezing” of Main Street pharmacies caused by decades of mergers and acquisitions. According to the FTC, the three largest PBMs control nearly 80% of all prescriptions filled in the United States, negotiating the terms and conditions for access to prescription drugs for hundreds of millions of Americans. The report blames falling reimbursement rates from PBMs for many of the financial troubles of smaller pharmacies.

“As long as the big three PBMs go unchecked, more pharmacy deserts will appear,” Rochol said.

The three largest PBMs are CVS‘s Caremark, OptumRX (part of UnitedHealth), and Express Scripts, owned by Cigna.

A spokesperson for Express Scripts pointed to its lawsuit filed against the FTC in response to the report, calling it unfair, biased, erroneous, and defamatory, and claims the report ” wrongly concluded that PBMs inflate drug costs and harm independent pharmacies.”

Tim Wentworth, Walgreens Boots Alliance CEO — who was CEO of Express Scripts from 2016–2021 — addressed PBMs in Walgreens’ third quarter earnings call, saying the company was “in active discussions with our PBM and payer partners to align incentives and ensure we are paid fairly.”

Walgreens has announced that it may close as many as 25 percent of its 8,200 stores, which will further squeeze communities that lack pharmacies. A spokesman for Walgreens pointed out that while they may be large in size, they are still “independent” — unaffiliated with a PBM — so they face many of the same price pressures as smaller stores.

CVS has also closed stores, and for its part, a CVS Caremark spokesman disputes claims that it is economically squeezing smaller pharmacies, citing Georgia as an example. Between 2023 and 2024, independent pharmacies in the CVS Caremark pharmacy network were reimbursed 67.5% higher on average than CVS Pharmacy locations, and 51.9% higher than other chain pharmacies in the state. 

“Local, independently owned pharmacies serve as vital partners in CVS Caremark pharmacy networks, representing more than 40% percent of our in-network pharmacies,” the spokesman said. “CVS Caremark reimburses independent pharmacies substantially more, in aggregate, than chain pharmacies.”

The CVS spokesman also said that CVS pharmacies are not all serviced by Caremark, working with over 70 different PBMs. None of CVS’s closings, the spokesman said, were related to PBM issues, but due to changes in consumer buying patterns and population shifts.

“Claiming that PBMs are under-reimbursing independent pharmacies is not based on the fact. Research in fact shows that PBMs are reimbursing independent pharmacies at higher amounts than chain pharmacies,” said Greg Lopes, spokesman for the Pharmaceutical Care Management Association, the national trade group representing PBMs. “There are unfortunately many factors for pharmacy closures in rural areas, including population declines and the growing use of online pharmacies.”

Data from the National Community Pharmacists Association illustrates the concern over PBM pricing.

Almost all pharmacies (99%) have experienced a reduction in the reimbursed dollar amount of prescribed medications at the point of sale. More than half say that insurance plans and their PBMs are reimbursing pharmacies less than the cost to purchase the drug for at least three of every 10 prescriptions they fill.

The National Association of Chain Drug Stores is pressing for PBM reform legislation. “The U.S. Congress has done the hard work to get bipartisan pharmacy benefit manager (PBM) reform ready to go, and that is ‘must-pass legislation’ before the 118th Congress adjourns,” said Steven C. Anderson, president and CEO of NACDS.

CVS pulled out of NACDS in 2022 amid the trade association’s support of PBM reform.

The vital role of the local pharmacist in Amazon era

According to experts, PBMs, are just one of many reasons retail pharmacies are struggling.

With the neighborhood pharmacy’s demise, patients have to get more creative in getting their medicines. Dr. Colin Banas, chief medical officer of health-care solutions company DrFirst, says there are various other ways for patients to get medicine if their neighborhood pharmacy closes.

“For urgent medications, if patients cannot drive to an available pharmacy, they may explore prescription pickup and delivery services offered by ride-share services such as Uber and Lyft,” Banas said.

He added that it’s also worth checking with local hospitals to see if they have in-house pharmacies that can dispense prescriptions. “Even some doctors’ offices and urgent care centers stock certain medications, so it’s worth making a few calls,” Banas said. 

But Banas believes the pharmacy deserts will only grow, and lead to an increase the number of apps and digitization.

“As pharmacy deserts become more common, patients should keep an eye on new apps and digital tools that will increasingly begin to fill some of the gaps,” Banas said.

This week, Amazon announced that its same-day prescription delivery would expand to roughly half the U.S. next year.

Patient advocates say that technology can’t replace humanity.

All the focus on PBMs, reimbursements, and profits misses the human aspects of the profession, says Dr. Tamera Hughes, an assistant professor at High Point University’s School of Pharmacy who spent several years working at a community pharmacy in Georgia during the last decade before entering academia.

Hughes says PBM business models do prefer to shuttle people more towards medication by mail, but what may be gained in short-term savings is lost in the value of the pharmacist-patient relationship.

“Medication delivery takes away the engagement and rapport that pharmacists build within the communities they serve,” Hughes said.

During her time working at a pharmacy, she got to know her regulars, their needs, and their ailments. “I knew all my customers by name; I asked about their holidays and grandchildren. By removing that one-on-one upfront engagement with the communities they serve, you strip away what it means to holistically look at someone else’s health,” Hughes said. “Pharmacists are not just dispensing the medication, but some of the other lifestyle things that produce a healthy individual, and pharmacies have been great historically doing it.”

In fact, Hughes says that a pharmacist often serves as a de facto doctor for someone who can’t afford a visit.

“People would come to the pharmacy counter to pick up a prescription, while another two to three people would come to pharmacy because their child is sick and say to the pharmacist ‘What can you recommend for a sore throat or a cough?’ … At least five times an hour, I walked from behind the counter to assist someone in picking out medication for their children, and we are able to ask questions to get them the best over-the-counter medicine,” Hughes said.

Pharmacies are being squeezed from all directions — by rising PBMS costs, competition from online pharmacies like Amazon, and retail competitors like dollar stores — but Hughes says by serving as a first defense against illness, neighborhood pharmacists can save greater strain on the larger health system. With the drug store chains like Rite-Aid closing hundreds of retail locations, that line of defense is being lost.

A spokesman for Rite Aid said the closings were the result of trying to create a more “efficient company.”   

In New Lebanon, city officials and the mayor just want their pharmacy back. Acting village manager Rob Anderson says it is a real inconvenience for some residents, and the Rite Aid closing served as a blow to the town.

“Having Rite Aid leave makes it seem like your town is on a negative path when, in reality, New Lebanon’s doing is just fine,” Anderson said.  “But it makes you think the big corporations don’t value your town like they once did.”

             

Summer trips to Europe are getting too hot for thousands of tourists.

Delta Air Lines President Glen Hauenstein said travelers are opting out of flying to Europe during the traditional summer peak travel season. Instead, they are shifting trips to cooler months, a trend that airline officials have been noticing over the past couple of years as consumers look to escape crowds and record heat of popular destinations.

“The weather in Europe in August is really hot, and that people who have choices when they can take their vacations are moving into let’s call it more temperate months,” Hauenstein said Thursday on an earnings call. Corporate [travel] we haven’t seen much change year over year but it’s continuing to shift travel to Europe in particular from July and August peak to a September and October peak.”

Summer this year in the Northern Hemisphere was the hottest on record, according to the European Union’s climate monitor.

Airlines have been extending robust trans-Atlantic schedules through much of the fall to cater to the shifting patterns.

“What we’re doing at United is we’re extending the season,” Patrick Quayle, United Airlines‘ senior vice president of global network planning and alliances, said in an interview earlier this year.

He said the carrier opted to begin some European routes in March and April this year and will fly some of them through late October and early November. “What we’re seeing is, more and more, travelers are going in those shoulder seasons where you can get a bit more value, and I think the weather’s a bit better,” he added.

United Airlines is plotting a 2025 international expansion that spans Senegal to Mongolia and Greenland to Palau, a bid to win over travelers who have already had their fill of the well-trodden streets of Paris, Rome and Tokyo.

Starting May 21, United will fly three times a week between its Newark, New Jersey, hub to Palermo, Sicily; on May 16, it will launch nonstops four days a week to Faro in Portugal’s Algarve region; on June 7 it plans three-days-a-week-service to Portugal’s Madeira Island; and on May 31 it’s starting nonstop flights to Bilbao in northern Spain, destinations that will beef up existing service to Italy, Spain and Portugal.

Its inaugural flight between Newark and Nuuk, Greenland, will begin June 14, United said Thursday.

“The savvy traveler has been to Paris, Rome and Madrid so many times that they’re looking for something different,” Patrick Quayle, United’s senior vice president of global network planning and alliances, told reporters.

The experimentation with routes makes United a standout among U.S. and global airlines that have largely stuck with bread-and-butter additions. The expansion is part of United’s strategy to “skate where the puck is going,” Quayle said, as the company wants to make sure it can be all things to all travelers, offering destinations from U.S. cities like Corpus Christi, Texas, to Cape Town, South Africa.

United is planning to launch daily, nonstop service to Dakar, Senegal, from Washington Dulles International Airport on May 23. Service from Tokyo’s Narita airport to Ulaanbaatar, Mongolia, is set to begin May 1. United has been beefing up service from Tokyo and will offer year-round nonstop flights to Koror, Palau, from there.

Not all destinations work. United had discontinued a nonstop flight to Bergen, Norway, in 2023 due to a lack of demand, but Quayle said the airline has wiggle room to continue expanding to far-flung destinations and that a diverse network can help drive sign-ups for lucrative rewards credit cards.

“The more unique content, the more we differentiate ourselves from our competitors and the more people are going to spend on United,” Quayle said.

United had originally planned to start the Faro, Portugal, service this year but was forced to delay it because of a Federal Aviation Administration safety review, which the agency ended earlier this month without identifying any “significant safety issues.”

United is also planning to expand flying from the West Coast, but it didn’t disclose any details on Thursday.

The average rate on the 30-year-fixed mortgage jumped 27 basis points Friday morning following the release of the government’s monthly employment report. The rate is now 6.53%, according to Mortgage News Daily.

That is 42 basis points higher than Sept. 17, the day before the Federal Reserve cut its benchmark rate by half a percentage point. Mortgage rates do not follow the Fed, but they loosely follow the yield on the 10-year U.S. Treasury.

For mortgage rates, it is all about what the expectation is next for the Fed. As such, there was a lot of anticipation leading up to this particular monthly report, since the last two pointed to weaker labor market conditions.

“Indeed, the Fed’s decision to cut by 0.50 vs 0.25 last month had much to do with the fear/expectation that reports like today’s would be in shorter supply going forward,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “The only salvation here would be the notion that this is just one jobs report in a recent run that’s been mostly weaker and that perhaps the next one won’t be so damning for bonds.”

However, the report does shift the outlook slightly for rates going forward, since most had assumed the trajectory would be lower.

“MBA’s forecast is for longer-term rates, including mortgage rates, to remain within a relatively narrow range over the next year,” the Mortgage Bankers Association’s chief economist, Michael Fratantoni, wrote after the jobs report was released. “This news will push mortgage rates to the top of that range, but we do expect that mortgage rates will stay close to 6% over the next 12 months.”

Today’s homebuyers are highly sensitive to rate moves, as house prices continue to rise from year-ago levels. There is also still very low inventory on the market, which has only served to keep prices higher. Rates are a full percentage point lower than they were a year ago, but the housing market has not seen much of a boost yet.

President Biden and his administration are sticking to their position of not evoking the Taft-Hartley Act to force International Longshoremen’s Association dock workers back on the job at East and Gulf Coast ports where a strike is hitting day two on Wednesday, a political decision that reflects the power of unions one month out from the election. Rhetoric from Cabinet Secretaries, including Transportation Secretary Pete Buttigieg and Acting Labor Secretary Julie Su, has become more pointed in recent days, pointing the finger at the ports ownership and ocean carriers. But there is a big risk on the other side of the political decision-making: wage increases that are a win for workers but ultimately ripple through the economy in the form of higher prices, both domestically and around the world.

Much of the focus about the economic impact of the ports strike to date has been focused on the direct hit to the economy from the massive trade shutdown, and the ways in which supply chain congestion and delays can result in higher prices being passed along to consumers, which will become a bigger factor the longer a strike persists. But maritime and business experts are also warning about the risk of persistent wage inflation making its way into supply chain prices that the Federal Reserve has recently been successful in taming.

“The wage increase would indeed be passed on and eventually be paid by the importers,” said Lars Jenson, CEO of Vespucci Maritime, a maritime shipping consultant. “The inflationary impact would vary dramatically depending on the value of the goods inside the container,” he said, adding the impact would be even bigger impact for agricultural exporters.

The ILA’s president Harold Daggett is seeking a raise as high as $5 per hour, per year, over a six-year period in a new contract for union port workers from the United States Maritime Alliance. The USMX, which represents port ownership, last offered what it described as a nearly 50% wage increase of six years on Monday, an offer rejected by the union. The USMX reiterated that offer on Tuesday, saying in a statement that its “current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy running.”

But Daggett countered claims of any “significant increase,” saying in the ILA’s own Tuesday statement that the USMX “conveniently omit that many of our members are operating multi-million-dollar container-handling equipment for a mere $20 an hour. In some states, the minimum wage is already $15. … the USMX also overlooks the fact that two-thirds of our members are constantly on call, with no guaranteed employment if no ships are being worked. Our members qualify for benefits only based on the hours they worked the previous year, making them vulnerable if there’s a downturn in work.”

Daggett told CNBC on Tuesday morning that the ILA is seeking a wage increase of 61.5%.

While a significant wage hike would undoubtedly be a big win for workers and a resurgent labor movement, with the union and port ownership group at an impasse ocean carriers have begun to take steps to protect their own financial position in the near-term for as long as a strike persists. CMA CGM, one of the world’s largest ocean carrier, declared force majeure on Tuesday, a legal maneuver to free itself of contract requirements with shipping clients due to forces beyond its control, and said it “may charge any additional operational costs” associated with vessels delayed due to the strike to cargo on the water as of October 1, 2024 with a U.S. East or Gulf Coast port of discharge.

President Biden said on Tuesday that his administration will be “monitoring for any price gouging activity” that benefits foreign ocean carriers, including those on the USMX board. He also said “foreign ocean carriers have made record profits since the pandemic, when Longshoremen put themselves at risk to keep ports open.”

Based on prior port strikes, ocean carriers normally profit from soaring freight rates based on demand for other ports as well as detention and demurrage fees on containers stranded during a ports shutdown. Analysts have been warning ocean spot rates could increase by 20%-50%. UBS forecast that 20% of Maersk’s total volume would touch a U.S. port that would be impacted by the strike. Maersk is on the board of USMX. UBS estimated that if freight rates increased 30% over two quarters, a revenue tail wind of more than $1 billion would be generated.

Buttigieg said on Tuesday that the DOT is monitoring “any attempts by companies to opportunistically raise prices, including ocean shippers or others,” and called on ocean carriers to withdraw surcharges. “No one should exploit a disruption for profit,” he said in a DOT statement. He added that the Federal Maritime Commission will use expanded authority signed into law by Biden to “ensure any fees assessed are legitimate and lawful.”

But the more significant price hikes would occur after a successful deal for the ILA, according to some economists, even though the total number of workers involved in the strike, at around 50,000, is a blip in a U.S. labor market that employs well over 100 million people. It comes amid other union battles across the U.S. economy targeting aviation and automakers. “The scale of wage demands at the ports, at Boeing, and at autoworkers, make one laugh at the claims that the labor market is soft and that wage inflation is dead,” said Larry Lindsey, CEO of The Lindsey Group.

Acting Secretary Julie Su lashed out at the idea that labor wage increases would be passed onto U.S. exporters and importers.

“At the same time that we were urging them to put a fair offer on the table to avoid all the disruption, they were calculating how much of a surcharge they could charge for shipping in light of a strike,” said Secretary Su said in an interview. “I mean, it’s really an outrageous position.”

For months, logistics and business trade groups representing major industries from retail to manufacturing and agriculture have sent numerous letters to Biden and his administration urging intervention. Now, with the president sticking to his position that collective bargaining is the only means for a “fair deal” for the ILA, executives across the economy are beginning to weight the potential pricing impacts for their business models.

“It quickly renders our U.S. agriculture exports much less competitive in the global marketplace,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition of any logistics rate increases his sector would see. “Our foreign customers can satisfy their food, farm, and fiber needs from other countries, which is where they will go,  as costs of moving containers through U.S. ports continue to increase.”

Acting Labor Secretary Julie Su said she is very sympathetic to the needs of the business community, but stuck to the administration’s position. “I’ve been in many conversations with them too,” she said. “I understand just how important the impact of a good resolution is. I know they understand, just as consumers and American workers understand, that foreign companies who profit from our economy and who employ American workers and have an impact on American consumers should do the right thing, and in that battle, we are always going to stand with American workers, American businesses and American consumers.”

The Federal Reserve has recently become more concerned about the labor market than inflation and his begun cutting interest rates to “recalibrate” its monetary policy in a bid to prevent a rise in layoffs and betting inflation is on its way back to 2%, which recent data supports. In the most recent nonfarm payrolls report for August, average hourly earnings increased by 0.4% on the month and 3.8% from a year ago, both higher than estimates. The September nonfarm payrolls report is due out this Friday and in the short-term, the union battle could influence the data on both wages and layoffs.

The upcoming nonfarm payrolls report is the last the Fed will receive before its next interest rate policy decision in November, and it could include downward pressures in the labor market as well, influenced both layoffs related to the strike and Hurricane Helene. The big payroll report immediately ahead of the government data, the ADP private payrolls report, showed that while hiring increased, pay growth has continued to trend down. The annual gain for those remaining in their jobs decreased to 4.7%, while it fell even more for job switchers, to 6.6%, down 0.7 percentage point from August.

“This would just completely complicate everything that the Fed is trying to do because they’re not getting a read to what the economy is actually performing,” Jim Bianco, head of Bianco Research, told CNBC’s “Fast Money” on Tuesday.

In the longer-term analysis, the wage increase being sought by the union will confirm that wage growth is not going back to its pre-Covid trend, of about 2.5%, according to Peter Boockvar, chief investment officer for Bleakley Financial Group. Instead, he estimates it will settle around 4%, which will put a floor under inflation.

“I continue to believe that after the disinflation plays out, which is mostly taking place in goods, 3-4% will be the normalized inflation rate,” said Boockvar. “And this wage deal, when it happens, will result in goods prices to inflect higher.”

“For those dependent on functioning ports for their livelihood, the collateral damage is often underestimated by those watching from afar,” said Alan Baer, CEO of logistics firm OL USA.  

Steve Lamar, CEO of the American Apparel and Footwear Association, said it’s imperative that the Biden Administration use all the tools at its disposal, including its authorities under Taft Hartley, to keep the parties at the negotiating table, the ports opened, and goods moving efficiently. “Allowing the status quo to persist increases the likelihood that this port crisis will hurt our industry and the overall U.S. economy through job losses, higher prices, and goods shortages,” said Lamar.

—Reporting by CNBC’s Jeff Cox contributed to this article.