Russia’s invasion of Ukraine happened only three weeks ago, but the magnitude of the event is being felt in all economies. The U.S. economy is well removed from the conflict, both geographically and commercially (due to small trade linkages with both nations).

The conflict’s effects on energy and commodity markets, however, are unavoidable. A spike in oil prices has added to inflationary pressures that were already high. Consumers notice the increase in gasoline prices immediately, while higher energy costs flow through to the final prices of nearly all goods and services.

The war did not change our baseline U.S. outlook. The domestic economy has a number of tailwinds: low COVID-19 cases, higher wages, pent-up demand and elevated savings will motivate consumers to continue spending. Inventories will rebuild as supply chain challenges are gradually overcome. We expect that positive momentum will allow the economy to keep growing, but downside risks are accumulating.

Key Economic Indicators

Influences on the Forecast