Did the Expanded Russian Invasion of Ukraine Constitute “News”

Reader JohnH is unconvinced that the Russian invasion was at all important to the US economy, according to his comments to this post. Here is the revision in GDP expectations going from pre-invasion to post-invasion.

Figure 1: GDP from 1/27/2022 release (gray), from 3/30/2022 release (black), February Survey of Professional Forecasters median (teal), and April WSJ survey mean (red). Source: BEA (various), Philadelphia Fed, WSJ, and author’s calculations. 

It would’ve been better to compare the SPF to SPF forecasts, but there is a GDP release for Q1 which drives a big move in the level. Hence, I compare February SPF to April WSJ. In my experience, when WSJ survey and SPF come out in the same month, the median/mean responses are very similar.

In this interpretation, the news of the expanded Russian incursion/”Special Military Operation” reduced end-year expected GDP by half of a percentage point. Nontrivial in my view.

What about inflation expectations. One year ahead inflation expectations jumped up in the wake of the expanded Russian invasion.

Figure 2: One year ahead y/y CPI inflation expectations, from Michigan survey (blue) from NY Fed median (tan), and from Coibion-Gorodnichenko Survey of Firm Inflation Expectations (sky blue squares). Source: Michigan University via FRED, NY Fed, and SoFIE. 

I’d say expectations of inflation rose substantially with the event.


48 thoughts on “Did the Expanded Russian Invasion of Ukraine Constitute “News”

  1. Moses Herzog

    It’s a little strange that anyone would even have to argue this. When has there ever been a major war where the general public would expect increased inflation not to occur?? Wheat, corn, barley, etc

    And if some countries are refusing to purchase exports from Russia in a type of punitive action against Russia for unprovoked war invasions, what would one expect to happen for global prices in the commodities which Russia exports?? Your average 12 year old could grasp the notion of what would follow after a war which threatens all of Europe is initiated with Russia’s track record.

    1. pgl

      ‘Ukraine is normally the world’s top producer of sunflower meal, oil, and seed and the world’s top exporter of sunflower
      meal and oil.’

      Ukraine makes up over 30% of the world production of sunflower products?! Thanks for this interesting document.

    2. Anonymous

      ukraine donations,detergent for the laundry are small potatoes to the largesse spread by w bush after 9/11

      dubya took the peace dividend, that willie j tried to blow in Serbia and spent in the pentagon like he was r. raygun

      that splurge gut the world with the gfc

    3. JohnH

      Yeah, like inflation wasn’t already roaring along at 7% YOY by December 2021 with no signs of abating. Why wouldn’t consumers expect it to get worse?

      I just love the way that economists isolate one factor and attribute everything to it…in this case Putin. It’s so ridiculous…they sounds like Wall Street analysts explaining to us why the market moved they way it did today. “The market was lower today on profit taking.” Sheer nonsense!

      1. pgl

        JohnH pulls a Bruce Hall with his reporting of inflation. Hey Jonny – you have been forecasting 6% inflation for the past 9 months. How’s that forecast working out?

      2. baffling

        “in this case Putin.”
        unlike comrade john, most Americans understand the evil in the world that is putin. john cannot bring himself to make a single negative comment about what has been exposed as a very evil man. putin supporters, such as johnh, are cowards who have given a pass on evil war crimes.

      3. Moses Herzog

        “isolate one factor and attribute everything to it”

        That’s a FOX news/ Barkley Rosser stunt. Misquote your opponent’s argument after you know you have lost the argument. “Mom said the only reason I am getting fat and getting type 2 diabetes by age 12 is because that single cookie I took out of the cookie jar yesterday!!!!!” Is that what “Mom said”??~~or did she just tell you to keep your F’king hands out of the cookie jar??

  2. Moses Herzog

    Finally got the lithium battery lawnmower this early Monday afternoon. Kind of ironic I saw this article online very shortly after purchasing the lawnmower.
    Probably could have gone with about two other choices, but got it at Home Depot. They had a larger selection and the price quote at the store was the same as online (which doesn’t always happen). The service was slightly slow, but I enjoyed bullsh*tting with an older handicapped gentleman while waiting. He seemed to be a gasoline mower type guy, but similar to me, curious about the battery ones. Angry about “inflation”, same to me. Finally a young Black gentleman asked if I needed help and then I was out the door in no time.

    I’ll give a full report in about 2 weeks for anyone who’s curious about the performance of the mower I got.

    1. Macroduck

      Aside from cutting down on CO2 emissions, the best thing about an electric mower is the reduction in noise. Oh, and never running out of gas. And reduced maintenance. Enjoy.

  3. pgl

    “One year ahead inflation expectations jumped up in the wake of the expanded Russian invasion.”

    Jonny boy has very malleable opinions. One day he is telling us that the invasion had no material impact. The next day he is jumping up and down on his soap box screaming INFLATI0N.

    Of course Jonny boy thinks he is the only one who understands expected inflation which he currently puts at 6% even though no one else agrees with him. But remember – Jonny asserts he knows everything and the rest of us are clueless.

  4. JohnH

    Apparently the host is arguing that the Russian invasion of Ukraine did affect the US economy. Yet a year ago, when I asked what the blowback from US sanctions on Russia would be, no one could hazard a guess!

    However, if people want to defend their lack of perceptiveness about likely blowback, they could always argue that there were other things going on in the economy. (Really!! There were!! It was not all about just Ukraine!} For example, the Fed started raising interest rates and decided to start QT. And oil prices rose 20% between the end of September 2021 and the end of January 2022. Are we to assume that those two factors had nothing to do with expectations and a decline in GDP growth?

    If the people who, with 20-20 hindsight, are now willing to admit to blowback now when they missed the potential for it a year ago, that’s fine with me. However, we do need to bear in mind that correlation is not causation…

    Personally, I’m pleasantly surprised that the blowback was not much worse that it was.

    1. pgl

      “no one could hazard a guess!”

      Why do you constantly say such dishonest and stupid things? You may be trying to sound smart but you constantly comes across as very, very dumb.

      1. JohnH

        And how exactly did pgl respond to my repeated question about blowback from US sanctions on Russia?

        1. pgl

          Your questions are dishonest, dumb, and not worthy of replies.

          Look dude – you have won the contest for Stupidest Troll Alive hands down. Take a vacation and stop wasting our time.

          1. JohnH

            pgl can’t answer my simple question! The reason? He couldn’t imagine any blowback from US sanctions!!!

          2. pgl

            April 18, 2023 at 3:01 pm

            More of this usual dishonest and worthless trash from Jonny boy – the complete waste of time.

        2. Anonymous

          trade benefits both customer and supplier…. sanction deny both the contracted benefits, presuming sanction would be legal without compulsions…

        3. Moses Herzog

          I can’t figure out why European countries would want to sanction Russia?? Unless they think something similar is very apt to happen to all of Europe once Putin ends his mass murders to annex Ukrainian land. But why would Europe think that??


          It is interesting to note, Elvira Nabiullina still is very happily breathing, and still has her same job as Chief of Russia’s Central Bank, no matter what you may have heard from “well connected” “Russian insiders” based out of Harrisonburg Virginia. How “strange”.

          1. Menzie Chinn Post author

            Moses Herzog: I don’t know why you keep on harping on Nabiullina still being in the job. Many people (including me) thought her days were numbered.

    2. baffling

      “Yet a year ago, when I asked what the blowback from US sanctions on Russia would be, no one could hazard a guess!”
      what a strawman argument. most of us were under no illusion that sanctions impact would not be limited to russia. it was understood that domestically there would be ramifications. but most of us decided those ramifications were worth stopping unstable evil man such as putin. and the past year has shown how evil the man is. and yet johnh continues to defend and support putin. that makes you not a good person, john.

      1. pgl

        Speaking of straw man doesn’t JohnH remind you of the Scarecrow in the Wizard of Oz? Yea – Jonny’s excuse for a brain is made of straw.

  5. w

    Of course it was “news”. Of course it affected perception. It created a lot of uncertainty and, over time, that uncertainty has decreased because ongoing events in that war have also been “news” and many of them were not what was originally expected.
    That means it is not simply a one-time news event – there was reaction to the original event but also changing reactions which also rightly should be noted.

  6. JohnH

    In other news, median usual weekly real earnings is stuck right where it was back in 4Q2021 and 4Q2019. So much for labor’s imaginary role in driving inflation. The question is, who would promote such a false narrative?? Hmmm… Maybe the guys with the means, the motive, and the opportunity to jack up prices and blame others for their greed?

    Over at Realtime Inequality, the data shows that from January, 2020 to December 2022, real factor income grew 0.8%, while real factor incomes for the bottom 50% grew 0.5%; the middle 40%, -1.1%; and the top 1% ……….[drum roll]………………..5.1%.

    If all this was Putin’s fault, it would be banner headlines…. But since mainstream economists don’t generally notice data like this, stagnation in workers real wages must not be Putin’s fault. Hmmmm…. I wonder who is to blame? Surely not the folks making record profits!!!!

    1. pgl

      More snide comments from the peanut gallery. Look dude – you can pretend you are smarter than everyone else. You can pretend you are a progressive. Problem is Jonny boy – you have proven yourself to be the Village Idiot supporting all sorts of right wing garbage. Now whine like a baby when call out. It is what you do. And the kiddies in pre-school are all laughing at you.

    2. pgl

      “median usual weekly real earnings is stuck right where it was back in 4Q2021 and 4Q2019.”

      Jonny boy kept telling us how real wages have fallen. Gee the same today as before the pandemic is not a decline. Not great but not a decline.

      Now UK real wages under Cameron did fall – a lot. Wait – little Jonny boy has told us for years that UK real wages rose. Yea – one of Jonny boy’s most persistent lies.

      1. JohnH

        pgl’s usual incoherent tantrum…he doesn’t like data that shows that workers are not getting ahead. Don’t worry, be happy, let the good times roll for the 1%!

        1. pgl

          I respect data. You use data to lie. But hey – after ten years of claiming UK real wages rose under Cameron when they fell a lot – why should Jonny start being honest now?

    3. pgl

      It seems Bloomberg has been reading the usual babble from JohnH and is now accusing little Jonny of :moving the goal posts!


      US Paychecks Are Outpacing Inflation
      Median earnings ran above consumer prices in first quarter

      Now I would argue looking at real wages over an extended period of time but when I do that little Jonny accuses me of moving the goal posts. So if you think Bloomberg is being unfair here – little Jonny plays the same pathetic game routinely.

        1. pgl

          They provided a useful graph that showed real wages over the entire period. A lot more than you did for UK real wages. So yea Bloomberg may have moved the goal posts Jonny style but they at least allowed us to see the entire picture. Something you never bother to do.

          Come on Jonny – your only talent is lying. So don’t deny. Take pride in the fact that you lie even more than Faux News.

          1. JohnH

            pgl thinks that the FRED data is a lie!!!

            It clearly shows that real wages are back to where they were in 4Q2019…an inconvenient truth for corporate shills like pgl.

          2. pgl

            April 18, 2023 at 5:17 pm
            pgl thinks that the FRED data is a lie!!!

            That is not what I said and you know it. You are about as disgusting of a little pointless liar as the world has ever seen.

            Who the eff are you trying to impress? Our host knows your game and just about everyone else here knows you are worthless little troll. Oh wait – CoRev is defending you. That’s it. Maybe you and CoRev should go on a date as you two are so made for each other.

  7. ltr


    FAO Food Price Index

    The FAO Food Price Index (FFPI) is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices (cereal, vegetable oil, dairy, meat, sugar) weighted by the average export shares of each of the groups over 2014-2016.

    Monthly release dates for 2023: 6 January, 3 February, 3 March, 7 April, 5 May, 2 June, 7 July, 4 August, 8 September, 6 October, 3 November, 8 December.

    The FAO Food Price Index continues to drop

    The FAO Food Price Index (FFPI) averaged 126.9 points in March 2023, down 2.8 points (2.1 percent) from February, marking the twelfth consecutive monthly decline since reaching its peak one year ago. During the past twelve months since March 2022, the index has fallen by as much as 32.8 points (20.5 percent). The decline in the index in March was led by drops in the cereal, vegetable oil and dairy price indices, while those of sugar and meat increased.

    1. pgl

      The spike in food prices a year ago was a serious concern. Thankfully these prices have returned to where they were before the Putin invasion of Ukraine.

  8. pgl

    More snide comments from the peanut gallery. Look dude – you can pretend you are smarter than everyone else. You can pretend you are a progressive. Problem is Jonny boy – you have proven yourself to be the Village Idiot supporting all sorts of right wing garbage. Now whine like a baby when call out. It is what you do. And the kiddies in pre-school are all laughing at you.

      1. pgl

        Hey Jonny boy – keep proving you are a worthless little troll. Guess what dude – no one here believes a word you say. Not one.

    1. baffling

      but you agree to a settlement when you are guilty, and the truth is even more damaging than the payout. this is the most expensive NDA i have seen! even faux news was embarrassed by their actions, it seems.

    2. Ivan

      According to NYT: “Staple Street paid $38.3 million in 2018 to acquire 76.2 percent of Dominion”


      The settlement seems many fold more than the value of the company – and the owners investment.

      You normally sue for a lot more than you expect to get in the final judgement. So making a settlement for half of what you asked is very high. I think Dominion leaked juicy bits from their discovery process, to push the settlement higher than they could ever expect to get from the court. Fox settled for fear of having their news people on display in a court room – not to talk about release of information that may still not have been leaked.

      Most of us already knew that Fox was the professional wrestling equivalent of news – but getting it out in a court room could have risked that substantial portions of their viewers finally got that the joke was on them.

      Maybe we can get some Senate hearings on this?

      1. baffling

        and they still have another company suing for defamation. and i think that case has a higher dollar amount. will be interesting. it is getting much more expensive to lie in the media these days.
        and take note to all you homers out there. faux news admitted to lying and deceiving in their statements. faux news admitted to lying, so that they could keep collecting money from their faux news rubes who watch daily. what a company. so reliable and honest, with no spin, eh?

        1. Ivan

          Yes the business model of telling people what they want to hear rather than bugging them with the truth and reality was invented by Fox. However they are now in very tight competition with internet rage “news” and they will likely lose. The internet rage “news” can target individuals and serve up the exact idiocies that a particular person want to see. Confirmation bias on steroids, and completely disconnected from reality. Those “news” “services” also have a much easier time claiming that they “didn’t do it” since they simply link to other peoples web pages. So the cost is very low and it will probably be at least a decade before someone manage to sue them for the immense damage they are doing to all of us.

          1. baffling

            the fact that faux news is a valuable company, with large amounts of revenue, make them a much juicier target than some overnight internet site. those sites can be sued for $1 billion, but you will never be able to collect. can’t say the same about faux news. its commercial success is also its achilles heal in lawsuits. let the target practice begin.

  9. Moses Herzog

    You know, I’m not even saying “this person” was a “bad person”. Not saying that. Sometimes people just do not get along, they have divergent views and personalities that create friction (the worst kind of friction). But I cannot help but saying since about 3 months and 10 days ago, this blog is so much more relaxing for me, and more therapeutic. Sometimes I enjoy good-natured debate, honest to God I do. I enjoy an occasional boxing match by Marquess of Queensberry Rules. But people who just want to start things for putdowns “one-upmanship” and looking to start fights just for a self-daydreaming of superiority, I hate. I hate it. And I avoid conflict and contention.

    I can’t help it, on a personal level, this blog has multiplied about 20 times better now. No putting up a comment just knowing someone is going to take the opposing side~~no legit reason~~just onlu EGO. It’s childish, sometimes boring, and often—aggravating. This blog truly is “serenity now”.

  10. Erik Poole

    Given that the US and most other economies have experienced back to back negative supply shocks, one would expect the US economy to be negatively impacted even if ramped up LNG exports offset the negative impact somewhat.

    Not to suggest that it is overly material but I would be curious to know the decrease in value of profits from Russia to the USA or perhaps easier to measure, to US-based companies.

Comments are closed.