Many experts expect our economy to slow down relative to last year’s pace of expansion.

It has been quite a busy two years. First, we had the pandemic. This was followed by a sharp recession. During the recession and recovery, we had shortages of many things, including consumer goods, cars, employees, and houses. This caused inflation, which is now prompting rates to rise.  The latest jobs report indicated that the recovery is continuing as the unemployment rate fell to a post-pandemic low. And now we have the Ukraine factor. We do know that the fate of Ukraine will affect our economy in several ways.

The problem is, we don’t know exactly how the economy will be affected. We can presume that oil prices will stay at a higher level -- and as a matter of fact, energy prices rose in anticipation of the invasion. This increase is on top of the rise in prices we have seen in the past year. Certainly, higher oil prices will put more pressure on inflation.  On the other hand, if the economic sanctions levied on Russia cause the economy to slow down, this could have a positive effect upon inflation in the long run.

Most economists are already calling for our economy to slow down somewhat from the torrid expansion pace of 2021 – and higher interest rates are a major factor in that equation. Measures placed on a major world economy as sanctions for aggression could add additional friction.  Again, we don’t know how much of a factor this situation will have upon the overall economy. Let’s hope this war is short-lived and diplomacy eventually prevails. Only then could we go back to concentrating on all the other aforementioned factors.