The Line: Russia Invades Ukraine
Updated: Mar 2, 2022
Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
Since the details keep changing rapidly, I don’t want to say too much about this now other than to answer a question I’ve been asked a lot this week: What does this mean for the economy and the housing market?
I must preface my answer by acknowledging the real concern here is for the safety of the people of Ukraine, and my response is focused solely on the economic consequences for the U.S.
For the economy, it means higher prices for many goods, but most importantly higher gas prices. Prices have already risen sharply over the past year, so this is the last thing we want to see. That said, consumer spending was very strong last month, so there’s hope the U.S. economy can keep growing—albeit at a slower pace—for a while even with further price increases.
Housing may see some short-term benefits from the uncertainty and chaos caused by this invasion. This would include an increase in demand as investors look to park their money in more stable assets, and the potential for lower mortgage rates as people seek the safety of U.S. Treasuries.
I want to be clear that the best thing for the economy and housing market would be a quick end to this invasion. Any short-term benefits for housing—or any other investment—will be wiped out by a prolonged war.
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