The US is bracing for railroad strikes - but markets shouldn't see that as a 'black swan' event, Goldman Sachs' chief economist says

Striking freight-railroad workers are unlikely to cause an economic shock, despite warnings from officials that a strike could cause growth to be curbed and inflation to rise.

Despite a warning from the Federal Railroad Administration that a strike could cost the US economy $2 billion a day, Jan Hatzius said that strikes are unlikely to become an economic "black swan".

Goldman's chief economist thinks it's not a black swan. "I think it's an indication, along with other indications of more labor strife and maybe more tensions, that labor still has a very significant amount of market power."

If firms are not able to broker a deal with unions by September 16, there will be a strike at some of the US's largest freight railroads. They're demanding higher wages, more time off, and better shift-scheduling processes as their bargaining power has been boosted by the low level of unemployment.

The labor market is tight. Strikes are sometimes the result of larger wage increases and better working conditions.

Inflation is currently running close to four-decade highs, and some economists fear that strikes will push up food prices even more. Hatzius argued that the food price shock from railroad strikes would be temporary.

He thinks it won't have a big impact on food prices.

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