A former top Obama economist doesn’t think Russia’s invasion of Ukraine will cause a recession in the US


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  • A former top Obama economist doesn’t see the US sliding into a recession this year.
  • “I’m not much higher than 20%,” Jason Furman said of his estimate of the probability of a recession.
  • He usually puts the odds at 15% in any given year and argues the US can ride out any energy shocks.

A former top economist in the Obama administration doesn’t think that the US faces a major risk of a recession this year in the wake of the Russian invasion of Ukraine.

“I’m higher, but I’m not much higher than 20%,” Jason Furman, now a Harvard University professor, said in a recent interview regarding his estimate of the probability of a US recession, adding that he usually puts the odds at 15% in any given year.

“There’s still room for the US economy,” he said, noting that oil prices are unlikely to cut more than a half percent off economic growth. “That’s a wide margin between where we are now and a recession.”

The US has already imposed a bevy of sanctions to punish Russia for its invasion of Ukraine. Those punitive measures included barring all Russian oil and gas imports, along with cutting off Russian government officials and business leaders with close ties to Russian President Vladimir Putin from their assets. Congress is inching closer to revoking normal trade relations with Russia, opening the door for tariffs on its products.

Russia hasn’t been a major US trade partner in recent years. The country was the US’s 26th-largest trading partner in 2019, according to the Office of the US Trade Representative. Two-way trade totaled $35 billion in 2019.

Furman argues the US is well-equipped to ride out any potential economic shocks. “There’s no question that we are taking risks with the American economy by trying to punish Putin,” Furman said. “I also think that those risks are very likely to be manageable and are very small compared to the much bigger issues at stake.”

Other forecasters are sizing up the risks of a recession differently with high energy prices and other uncertainty stemming from war in Ukraine. Goldman Sachs analysts recently put the odds of a recession at 35%, in part because of rising oil prices.

The US economy rebounded strongly from the pandemic, adding jobs at the fastest pace in decades. Wages have skyrocketed for the bottom half of the income distribution. But inflation has reached its highest level in 40 years, the result of supply-chain bottlenecks and ongoing labor shortages. It has prompted price hikes for food, gas, housing, and used cars, and other goods.

The Federal Reserve moved on Wednesday to hike interest rates for the first time since 2018.  The step increases the cost of borrowing money for everything from credit cards to mortgages, modestly increasing the price of lending to cool economic growth and tamp down inflation.