Local Financial Analyst Looks at Economic Impacts on U.S. and Global Economies – WHIO TV 7 and WHIO Radio

As battles continue in Ukraine following Russia’s invasion this week, sanctions and uncertainty are expected to have major economic impacts on the US, European and global economies, according to a local financial analyst.

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The U.S. economy is already grappling with inflation issues and economic uncertainty caused by “the major geopolitical event” that has put U.S. regulators in a difficult spot, said Fall Ainina, vice president of James Investment. Research at News Center 7.

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The two main commodities that will see price increases are energy, mainly oil, and wheat, Ainina said. That would mean higher prices for gas and other products, he said.

“It’s important because Russia has 10% of global energy production and 75% of gas consumption in Europe,” he said.

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Both Ukraine and Russia are major exporters of wheat and due to Russia’s connectivity within the European economy. But when it comes to overall impacts on the US economy, Ainina says that depends on the US Federal Reserve.

“The Federal Reserve’s reaction to these events will determine the impact on the US economy,” he said.

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Ainina said the Feds are “walking a tightrope” to not only limit war-induced uncertainty, but also the battle against inflation that the US economy is already facing. To help address inflation issues, Ainina said the Federal Reserve will need to raise interest rates, but how much will determine the economic impacts.

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“If they raise the interest rate too much, they can slow down the economy and plunge into a recession. But if they don’t raise interest rates, inflation is going to be higher, which is also bad for the economy,” he said.

“The question is how are they going to handle this crisis on top of rising inflation and the impact of rising oil and commodity prices. So far the market expects that they are tightening, which means that the fight against inflation is more important.

However, with the sanctions announced by President Joe Biden today, Ainina says Russia is likely planning a response on its own.

“What we have to worry about are cyberattacks. Depending on the severity of these sanctions, Russia will retaliate with cyberattacks. A lot of people would say that’s a risk to the economy.