Extreme weather is affecting parts of the United States. This is bad news for the economy | CNN business

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We’ve all heard Wall Street bigwigs liken the looming recession to gathering storm clouds, hurricanes, and thick fog. But what happens when those weather events are no longer just analogies?

This month, extreme heatwaves in Texas and other Southern states, toxic air from wildfires in the North, and extreme storms along the East Coast have caused further strife in an economy already on the verge of reversing.

It’s bad for the economy and certainly doesn’t provide the stability that would allow us to avoid something like sliding into a recession, said Justin Mankin, a geography professor at Dartmouth College who focuses on the risks global warming poses to ecosystems and people.

What is going on: More than 90 million people, mostly along the East Coast, were threatened on Monday as the system that produced nearly 400 storm reports Sunday moved east. An additional 40 million people in seven Southern states were warned of a heat wave on Monday, as the brutal heat wave underway in Texas winds down.

All told, at least a third of the US population is currently grappling with costly extreme weather events.

That’s on top of nine confirmed U.S. weather and climate events so far this year, each with losses exceeding $1 billion (many more likely to be confirmed in the coming weeks), according to the National Oceanic and Atmospheric Administration (NOAA).

Those nine events alone totaled about $23.7 billion in damage to the U.S. economy, the researchers found, and some analysts say this vastly underestimates the long-term impact.

In 2022, according to NOAA, extreme weather events cost the United States an estimated $165 billion.

How expensive these events will end up being is still largely unknown.

The nature of these extremes is that they ripple through our economies in ways we don’t fully understand, Mankin explained.

We know enough of them to say that they’re very harmful, but in terms of their actual costs and how long they accumulate, that’s something we in the research community are just trying to figure out.

Heatwaves in particular, he said, typically shock the economy.

Texas already loses about $30 billion a year in productivity due to its hot climate, according to a NOAA report. They predict that number will rise to about $110 billion a year by 2050, 2.5% of the Texas economy.

Sector by sector: Extreme weather conditions have a major impact on the economy, but some sectors tend to suffer more than others.

Take airlines, for example.

More than 5,000 U.S. flights were delayed or canceled on Monday as powerful storms hit parts of the country. Flight delays often result in huge economic losses; the Federal Aviation Administration (FAA) estimated the cost of airline backups at approximately $33 billion in 2019.

Travelers check in at a Southwest Airlines ticket office at Chicago's O'Hare International Airport, April 18, 2023.

This spring, Southwest Airlines cited extreme weather as a growing concern for airlines after disruptions from December storms cost the company nearly $1.2 billion.

Whether it’s hurricanes or winter weather or rain, thunderstorms, we now need a planning process that includes results beyond what we’ve seen before. This is a big plus for us, said Andrew Watterson, COO of Southwest.

The agriculture, construction, tourism and renewable energy sectors also tend to bear the brunt of extreme weather events.

The cost of the consumer: In Texas, electricity costs are up 100% in some cases as a record heat wave drives up demand, driving up household costs dramatically.

Flood insurance and home insurance have also become necessary but often unattainable. Experts fear the cost of insurance will only get worse as climate change intensifies both hurricanes and extreme rain events.

Major insurance companies have already virtually pulled out of the Florida market, leaving homeowners paying premiums nearly four times higher than those paid in other parts of the country. Hurricane risk is part of Florida’s problem Hurricane Ian last year was the costliest storm to hit the state.

We are very under-adapted to the extreme weather and climate conditions we have right now, Mankin said. And this also applies to our economy.

Russia’s economy is much smaller than the American and Chinese ones, but it plays a huge role in shaping the world economy, according to my colleague Mark Thompson.

This is because it is still one of the largest suppliers of energy to global markets including China and India.

Rystad Energy analysts said bouts of geopolitical uncertainty in major oil-producing nations over the past 35 years, from civil unrest to coup attempts, armed conflicts and government changes, added an average of 8% to the oil price over the next five days. the triggering event.

That uncertainty was present as disaffected Russian mercenaries marched on Moscow this weekend, drawing a stern warning from President Vladimir Putin that the country was on the verge of a 1917-style civil war.

The armed insurgency has been defused for now, but the most serious challenge to Putin’s authority in 23 years could yet usher in a period of turmoil and change.

Any significant loss of Russian energy would force China and India to compete with Western nations for supplies from other producers. If political chaos restricts exports of other products, such as grains or fertilizers, it could also throw supply and demand out of control. And that could drive up prices for everyone.

Oil and natural gas prices rose on Monday, while wheat prices rose briefly as investors reacted to the chaotic insurrection. U.S. crude oil futures briefly edged up 1.3% before trading 0.6% higher on Monday evening. Brent, the international benchmark, gained 0.6%. Both contracts lost nearly 4% last week.

Stories of mass layoffs in the US may dominate news cycles, but US workers feel good about the job market. Consumers aren’t worried about becoming unemployed soon, according to a new survey by the Federal Reserve Bank of New York.

The Feds May survey of households, called the Survey of Consumer Expectations, found that working people in the US thought there was less than an 11% chance of losing their job in the next year. It is down from 12.2% a month earlier and the lowest rate since April 2022.

The number of US consumers who believe unemployment will be higher in a year’s time also fell this month.

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