How The Ukraine War Will Spill-Over Into The Broader Economy And Lead To A Global Slowdown

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by Tyler Durden
Friday, Feb 25, 2022 - 07:25 PM

By now it has become abundantly clear that the Ukraine conflict carries huge risks for the global economy just as activity was starting to recover from the pandemic (and is the reason why Goldman yesterday said that odds of a 50bps rate hike in March are now largely off the table).

It is also conventional knowledge that the surge in energy prices leading up to and following the invasion has been well-documented and the effects of that can already be seen in inflation data, with the AAA warning that $4 gas is coming. Meanwhile, increasingly jittery financial markets are likely to be a headwind to the economic recovery. Meanwhile, as Bloomberg notes, economists now agree with what we have been saying for weeks, namely that a prolonged conflict will deliver a major blow to global markets and slow the normalization of central bank policy that is expected this year. Of course, that slowdown was bound to happen anyway in light of the woeful state of the US consumer as confirmed by the recent Rent-A-Center earnings, and today's collapse in the personal savings rate.