Info Re: financial Impacts of the Ukraine Crisis

Alexis DuffyNewsroom

Upwards arrow with dollars in background

If you’re like me, you’ve been keeping a close eye on the news as the crisis in Ukraine continues to escalate. Above all, our thoughts go out to the Ukrainian military and citizens as they navigate this unfathomable tragedy.

You may also be wondering what the far-reaching impacts of the situation may be if the escalation continues, especially from a financial standpoint. I thought I’d pass along some insights to help you stay informed and be prepared:

  1. Higher borrowing costs. At a minimum, the Russia-Ukraine situation may potentially further complicate the Fed’s difficult task of curbing inflation without fueling a recession. The anticipated interest rate increases 1 will increase borrowing costs for consumers on everything from mortgages and car loans to credit cards.
  2. Higher prices at the grocery store. Russia and Ukraine are significant exporters of wheat, rye, barley, and other grains to Central Asia and the Middle East. Further escalation would drive global food prices higher when many are already struggling to reconcile their grocery budget with checkout line sticker shock.
  3. More pain at the pump. With Russia producing 10.5 million barrels of oil a day 2, disruption in its production would send oil prices soaring, sending already-eight-year-high gas prices3 even higher. If Russia responds by halting oil exports, prices could jump to $120 a barrel4 . In addition to pain at the pump, higher oil and natural gas prices would also drive up heating and electricity bills.
  4. More supply chain issues. Russia produces just under half of the world’s palladium5 and smaller amounts of platinum and nickel—critical components in smartphones, laptops, and countless other products. Ukraine is Europe’s top producer of uranium 6. Any bottlenecks in production could exacerbate the semiconductor shortage and further push up the prices of cars, electronics, and other high ticket items.
  5. Potential cyberattacks. Recalling the disruption caused by the Colonial Pipeline cyberattack 7 in May 2021, additional cyberattacks—especially on the U.S. financial system—are a growing concern for experts 8 as the Russia-Ukraine plays out.
  6. Stock market volatility. We’ve already experienced 9 (and are currently rebounding from) a sell-off, and investors can expect for volatility to continue as the crisis unfolds. 

I know you’re already weary from the pandemic and rising inflation. Unfortunately, the Russia-Ukraine crisis is one more factor to watch. Please know that the team and I will be here to help you and your family weather its economic effects. 

Citations

  1. BankRate, February 18, 2022 
  2. S&P Global Commodity Insights, January 2, 2022
  3. CBS News, February 15, 2022
  4. Fortune, February 22, 2022
  5. Reuters, October 18, 2021
  6. Home Security Today, February 20, 2022
  7. Bloomberg, June 4, 2021
  8. Reuters, February 22, 2022
  9. USA today, February 25, 2022

Neither Pensionmark Financial Group, LLC (“Pensionmark”) nor its advisers provide tax or legal advice.  Please consult with an appropriate professional.
Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).