Day by day, Americans have seen the price of everyday expenses grow.
As President Joe Biden announced sanctions imposed against Russia, the United States are expecting huge financial ramifications on the U.S. economy.
RISE AT THE GAS PUMP
Oil prices have jumped to levels higher than anytime in the last eight years – mainly because the conflict could halt Russian energy supply.
In 2021, Russia proved to be an energy workhorse, producing nearly 10 million barrels per day, according to Rystad Energy.
Supply and demand continue to rise and investors are on high alert as they are unable to keep up; worried about a damaged infrastructure in a war.
Oil prices are currently above $100 a barrel due to the crisis, but JPMorgan says we could see oil prices rise to $150 a barrel if Russian oil exports are halved.
AAA says that gas already stands at a national average of $3.54 – a seven-year high.
INFLATION
One of the biggest problems facing the U.S. economy right now is inflation. The invasion by Russia on Ukraine could make it worse.
The inflation rate, year-over-year, stands at 7.5%, but could rise to 10% before it’s all said a done – a number America hasn’t seen since 1981.
The price of gas per gallon would rise, but higher oil prices could drive up the cost of heating and electricity costs.
Higher energy prices would make flights more expenses and elevated transportation costs for businesses already fighting the rising expenses.
Russia is also a major producer of metals, including aluminum and palladium. They also export wheat – which could also see a spike in prices.
BORROWING COSTS
If America sees an inflation move above 10%, the Federal Reserve will be tasked with getting the prices under control. U.S. consumers could face high interest rates to help cool off inflation.
Americans could see high borrowing costs from car loans, mortgages, credit cards and much more. The U.S. has already faced an already rising inflation situation, and many fear that the Federal Reserve would have difficulty taming the inflation rate without causing a recession.
