Russia-Ukraine conflict could impact US consumer spending habits – Footwear News

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As the conflict between Russia and Ukraine escalates, American consumers brace for economic turmoil.

U.S. stock markets fell Thursday morning after Russia launched an invasion of Ukraine, although they ended the day in positive territory after President Biden’s remarks.

In light of the unrest, it is clear that this conflict could have ramifications far beyond Eastern Europe.

“The [falling markets] affect people’s investments and the general view of the economy, so it could translate to more cautious consumer behavior and have a minor negative impact on retail sales,” explained GlobalData Managing Director Neil Saunders.

Additionally, Russia is one of the top three oil producers, with around 13% of the market. Given the conflict, supply chain slowdowns could push oil prices higher — which were already above $100 a barrel this morning — and could hit U.S. consumers at the pumps.

“This crisis reinforces the notion of mutual interdependence of the global economic policy environment,” said Brian Marks, associate professor of economics and business at the University of New Haven. “At the end of the day, we are all connected and what happens between Russia and Ukraine will impact everyone in the world, right down to the consumer.”

Rising oil prices could push prices at the gas pump to between $4 and $6 a gallon, Marks said. At the same time, food prices are likely to rise given the impact on Ukraine, a major food exporter often referred to as “Europe’s breadbasket”.

“Rising energy and commodity prices affect the ability of countries and economies around the world to produce goods more cheaply and fight inflation,” said Yoni Mazor, chief growth and development officer. co-founder of Getida, specializing in auditing and reimbursements for Fulfillment by Amazon.

The sharp rise in commodities comes amid a period of record inflation in the United States. Consumer prices rose 7.5% in January from a year ago, according to the monthly report from the Bureau of Labor Statistics. The figure was up from 7% growth in December and represented the highest rate of inflation since the 12 months to February 1982.

“My administration is using every tool to protect American families and businesses from rising prices at the gas pump. And we are taking active steps to reduce costs,” President Biden said at a press conference Thursday. “And American oil and gas companies shouldn’t – shouldn’t – exploit this moment to raise prices and boost profits.”

As economic trends dictate, when commodities like oil and food go bankrupt, consumers are less likely to spend their money on other items not immediately needed, like luxury clothing or accessories.

“It will impact our ability to purchase other assets,” Marks said. “Disposable income is less available to buy other things.”

At the same time, people are more likely to stay home during a time of conflict, which could impact the already beleaguered tourism industry. However, Marks noted that less foreign travel could increase U.S. travel and tourism opportunities.

“People are less likely to travel during a conflict, and this conflict doesn’t seem to be over anytime soon,” Marks said.

President Biden, however, has said that US sanctions on Russia – including export blockages of certain technologies – will help end the conflict sooner rather than later.

“The idea that this is going to last a long time is highly unlikely,” he said.

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