Dockworkers at US East Coast and Gulf Coast ports agreed on Thursday to suspend their strike for 90 days, averting a potential economic disaster a month before the presidential election.

The International Longshoremen's Association (ILA) — the union representing 45,000 striking US dockworkers at the ports — reached a tentative deal to suspend the strike until Jan 15 to provide time to negotiate a new contract, the ILA said on its website.

The deal will allow the union and the US Maritime Alliance, which represents the shippers and ports, more time to negotiate a new six-year contract.

The tentative agreement is for a wage increase of around 62 percent, a source familiar with the matter told Reuters.

The ILA said in a brief statement on its website that it will "return to the bargaining table to negotiate all other outstanding issues. Effective immediately, all current job actions will cease and all work covered by the Master Contract will resume."

For the highest-paid longshoremen, a 62 percent increase would raise hourly pay to just over $63 from the current $39 per hour, The New York Times reported. The $63 hourly wage would put the pay of East Coast and Gulf Coast dockworkers slightly above their fellow longshoremen on the West Coast, who belong to a different union, the Times reported.

The union also has been demanding a ban on automation at the ports, which it sees as a threat to jobs. Both sides also have been divided on the issues of pension contributions and the distribution of royalties paid on containers that are moved by workers.

"With the grace of God and the goodwill of neighbors, it's going to hold," President Joe Biden said Thursday of the tentative deal, adding that it "represents critical progress towards a strong contract".

The strike had fueled some pandemic-era-style panic-buying this week, even of items that don't arrive at the maritime terminals.

Among those goods was the household essential toilet paper, which there also was a run on in 2020 at the onset of the COVID-19 pandemic.

The US Department of Commerce said in a statement to CNBC on Thursday that the "work stoppage at East Coast and Gulf Coast ports will not have a meaningful impact on toilet paper supplies. Nearly 90 percent of toilet paper used in the United States is domestically produced, with the majority of imported supplies coming from Canada and Mexico over road or rail."

And while massive amounts of consumer products shipped to the US come from China — with decorations for the upcoming holidays a prime example — most of those goods arrive at West Coast ports, in California cities such as Los Angeles and Long Beach, and Seattle and Tacoma in Washington.

Toy makers Mattel and Hasbro get most of their supplies from China via the West Coast ports, said Linda Bolton Weiser of D.A. Davidson.

At least 45 container vessels were unable to unload by Wednesday, up from three before the strike began, according to Everstream Analytics.

The strike had been the largest in the US since 1977 and had blocked unloading of container ships from Maine to Texas, threatening shortages of everything from bananas to auto parts.

"I'm definitely relieved," Daniel J. Barabino, chief operating officer at Top Banana, a fruit distributor at the Hunts Point Produce Market in the Bronx, New York, told the Times.

Agencies contributed to this story.