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In The Aftermath Of The War, The Economy Of The United States Would Stall, Europe Will Be In Recession, And Russia Will See Double-Digit Declines

War fallout: U.S. economy to slow, Europe risks recession and Russia to suffer double-digit decline

Image Source: Manufacturing

Economists predict that the United States will expand more slowly, with more inflation, while Europe will flirt with recession and Russia will plummet into a deep, double-digit downturn. This is the first attempt to predict the economic consequences of the Ukraine invasion, and the results are mixed.

The average of 14 economic projections for the United States predicts that GDP will rise by 3.2 percent this year, a slight 0.3 percent decrease from the February estimate but still above-trend growth as the country continues to recover from the Omicron slowdown in the previous year. Inflation for personal consumption expenditures, the Fed’s favored gauge, is forecast to increase by 4.3 percent this year, 0.7 percentage points higher than the preceding poll in February. Forecasters noted, however, that there is still significant uncertainty about how the United States economy would react to the oil shock, which has seen crude prices jump swiftly past $126 a barrel and the national average fuel price rise to more than $4 per gallon of gasoline. Most perceive risks to their estimates tilted toward more significant inflation and poorer GDP.
Economists believe that a total withdrawal of Russian oil from global supplies would result in a significantly more bleak conclusion.

According to a report published over the weekend by JPMorgan, a total shutdown of Russia’s 4.3 million barrels per day of oil supplies to the United States and Europe would have catastrophic implications. “To the degree that this disengagement gains momentum, the scale and duration of the disruption — and, therefore, the shock to the global economy — will rise in magnitude and duration.” According to the CNBC Rapid Update, economic growth in the United States increased to 3.5 percent in the second quarter from 1.9 percent in the first. However, that prediction for the second quarter is down 0.8 percentage points from the previous poll. As a result, the economy is still recovering from the omicron wave, but at a slower rate as inflation takes a more significant toll.

Inflation predictions are 1.7 percentage points higher for this quarter and 1.6 percentage points for the next quarter. According to forecasts, inflation is predicted to decrease from 4.3 percent to 2.4 percent by the end of the year.

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