Bad weather merely a 'blip'? Our economy doesn't think so

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Hurricanes and other extreme weather events can have long-term effects.

Scott Whiting/U.S. Marine Corps

As you may have noticed, the United States’ economy was sputtering in early 2014. Even the most recent upbeat jobs report didn’t allay all concerns.

Recently, the International Monetary Organization lowered its U.S. forecast for the year, and many economists have been scratching their heads trying to explain why the economy just wasn't kicking into gear.  

Their answer: Bad weather did it. And as they look toward the future, some economists, at least, are wondering how unusual weather patterns caused by climate change may put a damper on a nation’s long-term fiscal health.

How weather hits the economy

Indeed, unusual weather affected big parts of our country in recent months. A prolonged drought in California and in the Southwest; and a long, cold winter in the Northeast are held up as possible causes for the sluggish economy.

Bad weather causes construction to be put on hold, shipment of goods to arrive late, and consumers to hold off on big durable purchases. When better weather conditions return, the economic argument often goes, such losses will be offset by the ensuing uptick in economic activity.

In other words, bad weather is merely a "blip" and it will be made up down the line by better performance once it rains, temperatures drop or rise, and storms have passed.

Well, it’s not quite so simple and this is why extreme weather events driven by climate change should be of concern to all of us.

Some sectors can’t rebound

While “blips” may hold true for parts of the U.S. economy, there are sectors that can't simply shift economic activity into the future.

Take agriculture, where the timing of planting and harvest seasons are pretty much fixed every year. Bad weather during crucial periods of the growing season can produce dramatic losses that cannot be made up later.

Even looking at agricultural output over the course of an entire year, we now have very strong evidence that cereal crop yields are highly sensitive to extreme weather, such as unusually warm temperatures.

In fact, the recent and often-cited report by the Risky Business Project shows how impacts from bad weather affect sectors within the U.S. economy, singling out agriculture as one of the harder-hit industries.

American farmers in some states stand to lose billions of dollars as corn, soy and other staple crop yields decline by 50 percent or more, the report concluded.

When bad weather arrives, GDP is lowered that year, but so is the future growth of a country's economy. 

A growing body of evidence-based research is also showing how higher temperatures in the U.S. affects labor productivitymortalitycrime ratesand electricity demand – all of which have an impact on a nation’s economy.

Extreme weather dampens future growth

Economists have looked into how a nation’s Gross Domestic Product is affected during unusually hot years for the poorer half of the countries in the world.

Not only do unusually high temperatures decrease a country's GDP, but they also have long-lasting effects as they affect that country's economic growth rate over time.

In other words, when bad weather arrives, GDP is lowered that year, but so is the future growth of a country's economy. These effects are much more serious than the idea of weather merely causing "blips", or even just short-term effects, on our economy activity.

It makes sense, then, that some economists are paying closer attention to weather these days.

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Kyle Meng

Kyle Meng

Kyle Meng is an environmental economist and a post-doctoral fellow with EDF's economic policy and analysis team.
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