Photo by Karolina Grabowska
The ongoing conflict between Israel and Hamas, which has resulted in escalating violence and geopolitical tensions, is now causing concerns about a potential spike in global inflation.
One of the primary factors contributing to these concerns is the surge in oil prices. Oil prices reached as high as $93 a barrel, reacting to the possibility of an expanding conflict.
The increase in oil prices can significantly impact the global economy, as it affects various sectors, from transportation to manufacturing. As oil prices rise, costs for fuel and energy also go up, which could lead to increased production and transportation costs, eventually causing a spike in consumer prices.
These events come at a time when central banks, like the Federal Reserve, have been working to combat inflationary pressures. The result is a fragile balance between economic growth and inflation control. Then add to this the costs of supporting allies in conflicts.
Standard & Poor’s, which rates the creditworthiness of governments and companies, announced that the conflict between Hamas and Israel–in addition to the Ukraine-Russia war–threatens to compound an already strained global outlook.
Standard & Poor’s warned a further increase in energy prices triggered by the escalating conflict in the Middle East “could underpin inflation and weigh on economic activity,” The Guardian reported.
Yet, U.S. Treasure Secretary Janet Yellen has declared that the U.S. can “certainly” afford to support Israel and Ukraine with aid. Yellen seemed to overlooked the possibility of risking an economic implosion spurred on by the U.S. war appetite and the country’s Israel alliance that has already fueled inflation fears.
Yellen told Sky News the U.S. can “certainly” afford to support wars on two fronts, as the conflict between Israel and Hamas threatens stability in the Middle East and the U.S. continues to back Ukraine’s fight against Russia, CNBC reported.
As The Moguldom Nation recently tweeted, “How are you the “Treasury Secretary” talking about America can afford war on two fronts, with 8% mortgage rates, inflation pressures, & a recession right around the corner? Are you trying to blow America up with inflation & instability or something?”
In another tweet, The Moguldom Nation wrote, “If America jumps into new trillion dollar war over Israel, the American streets will “catch on fire.” All walks of life will be in streets protesting. The inflation, gas prices, a pending recession, and the prioritization of her policies &ATM, will be a problem.”
In addition to the trickle-down affects of conflicts,, there are other risks looming for the inflation outlook, including the current auto worker strike El Nino weather patterns this winter, Politico reported.
Of course, all of this will impact the stock market. The Federal Reserve’s policies pose a threat to both U.S. financial markets and the economy, warned John Greenwood, a fellow at the Johns Hopkins Institute for Applied Economics, Global Health and the Study of Business Enterprise, and economist Steve H. Hanke in an Oct. 22 opinion piece in The Wall Street Journal.
They noted there is a looming risk of a severe recession and the potential for a recurrence of a Black Monday scenario like that of 1987 when there was a catastrophic worldwide stock market crash as the Dow Jones fell 508 points, or 22.6 percent, in a single day.
Photo by Karolina Grabowska: https://www.pexels.com/photo/american-flag-and-money-falling-down-4386420/
