The U.S. has limited trade ties with Russia and Ukraine, but businesses from beer breweries in Missouri to semiconductor plants on the west coast would see an impact, as prolonged combat and even harsher sanctions constrict supplies and drive up global prices for oil and other critical materials.
An extended military conflict between Russia and Ukraine would hit the U.S. economy as a whole, with all 50 states affected by the fallout. Chief economist Mark Zandi said “The odds are much better than ever that we actually do experience a recession in that scenario.”
Energy producers such as North Dakota and Alaska stand out in that regard, with a lengthy conflict boosting oil prices to $150 a barrel as Russia reduces energy supplies to Europe. The analysis, by Moody’s Analytics shows that an extended war would hurt U.S. states and localities in a variety of ways, some of them not immediately apparent.
Michigan automakers would be hit by continued shortages of computer chips, as semiconductor plants deal with cutbacks in Ukrainian supplies of the neon they need for lasers. Higher prices for palladium, used in catalytic converters and a major Russian export, would also affect carmakers.
High-end condominium prices in New York City and south Florida could fall as Russian oligarchs are frozen out of those markets.
Farmers would see mixed effects. Some would benefit from higher prices for wheat and corn as supplies from Ukraine (the breadbasket of Europe) are constricted. They would have to pay up for fertilizer, a key export from the region.
Livestock producers would find themselves spending more on feed stock. Higher barley prices would affect beer makers in and around St. Louis.
States with greater exposure to the financial markets, like New York and Connecticut, would be under pressure as extended hostilities after a Russian occupation of Ukraine heighten uncertainty and put an even bigger dent in stock prices.
Washington and South Carolina, the two states that export the most proportionally to Russia and Ukraine, would be hurt. Shipments affected likely would include transportation equipment from Washington and auto parts from South Carolina.
Mark Zandi has some reservations about Moody’s Analytics computer model which suggests that the U.S. as a whole would be able to avoid a recession, even if military hostilities are prolonged. “Models are very good in typical times, in highly stressed and very unusual environments, the world goes what I would call non-linear and things go off the rails.” Zandi said.