Russia launched a full-scale invasion of Ukraine on Thursday, unleashing airstrikes on cities and military bases and sending in troops and tanks from three sides in an attack that could rewrite the post-Cold War security order.
While the invasion is thousands of miles away, it will have massive impacts here at home for an economy already weakened by inflation, rising energy prices, the pandemic and supply chain shortages.
“This just adds fuel to that fire,” Gerald Prante says. “More bad economic news in the marketplace.”
Prante is an economics professor at the University of Lynchburg. He says the attack will result in three major things.
“The typical American will feel it in higher energy prices, portfolios will be shrinking and then there’s the risk of a cyber attack.”
Russia is one of the world’s largest producers of oil and natural gas. Russia’s invasion of Ukraine has caused global energy prices to spike, with crude oil rising Thursday above $105 a barrel for the first time since 2014.
Currently, Virginians are paying $3.41 a gallon. According to a spokesperson from AAA Mid-Atlantic, that’s about .86 cents more than this time last year.
“We really don’t see a lot on the immediate horizon that would bring some of that down,” AAA’s Morgan Dean says. “That doesn’t seem to be in the cards based on what happened overnight and into this morning.”
Also Thursday morning, the U.S. began to see stock market volatility. The Dow Jones Industrial Average tumbled 830 points, while the Nasdaq composite slipped about 1.5% and the S&P 500 tumbled 2.5% at the start of trading.
Economists warn unrest could cause people to cut back on spending. If the slowdown is severe enough, it could impact how aggressively the Federal Reserve raises interest rates.
“People could be holding back due to the volatility and will that push us back into a recession?” Prante adds.
It’s unclear exactly how much the invasion will impact the economy. What is clear, it’s going to bring continued inflation, rising food prices, stock market volatility and more cyber attacks.
Here’s a closer look at how gas prices have varied since January 2020: