The Russian Invasion of Ukraine & its Effect on Business in the US – Part 1

What impact Russian invasion of Ukraine having on U.S. business and economy? The conflict between the two countries has been long, and throughout the 20th Century, Ukraine has fought to obtain its independence, which it ultimately gained in the 1990s. In the years since, Russia’s President, Vladimir Putin, has as led a misinformation campaign, telling his country that Ukraine is pro-Nazi and committing genocide and the purpose for the invasion was to “demilitarize and de-Nazify” the country.

On February 24, 2022 Russia invaded Ukraine. The invasion has had a significant effect throughout our economy, causing the Consumer Price Index to increase by 7.9 percent in February 2022. This was the fastest pace of annual inflation in 40 years.  Before the invasion of Ukraine, price surges were expected to decrease. The stock market has also taken a hit, as investors worry about the stability of the U.S. economy.

As the inflation rate in the United States steadily increases, many American families feel the pressure at every level including food, gas and other retail products. These rising costs can be linked  to the Russian invasion because of Russia’s oil and agricultural exports.

As of March 7th, 2022, oil prices had increased 60%. Russian oil accounts for about 8% of oil imported to the US. Russia and Ukraine account for 29% of the world’s total wheat exports, which has a significant impact or disruption to the food supply.

According to data from the Bureau of Labor Statistics, grocery prices have increased by 8.6% over the past year.  As the cost of oil and other imports rise, these increases will be compounded by war in Ukraine. These higher prices make it more difficult for low-income households, as they spend a significant proportion of their income on necessary items like gas and utilities.

The war in Ukraine has caused the stock market to decline in the U.S, with the S&P 500-stock index closing at almost 3% below on March 7th, 2022. Investors continue to be concerned about the stability of the global economy, and they are worried that the conflict will cause businesses to lose money.

From oil conglomerates to internet providers, companies around the world are cutting off resources to Russia and are shutting down operations, following their invasion of Ukraine. “History suggests that large disruptions to oil supply, which a proposed ban on imports of Russia’s oil would probably represent, could weigh heavily on the U.S. stock market,” Thomas Mathews, markets economist at Capital Economics, said in a research note.