Climate change may hurt U.S.’s long-term growth — Fed study

Source: By Michael S. Derby, Wall Street Journal • Posted: Friday, May 4, 2018

Global warming could reduce U.S. gross domestic product by as much as one-third over the next century, new research from federal banking regulators suggests.

The study, published by the Federal Reserve Bank of Richmond, looked at how regional economies behave during seasonal changes. Researchers found that during summers that are hotter than normal, economies slow down. They pick up again once lower temperatures arrive in the fall.

At the state level, the study found, a 1-degree-Fahrenheit increase in average summer temperatures decreases growth by 0.15 to 0.25 percentage point.

Rising temperatures affect productivity in many ways. In the labor sector, construction and agriculture work slows down, they wrote. Sluggish shoppers affect retail sales. Temperatures also affect workers’ health — even those who work in air-conditioned offices.

The authors note, however, that the exact degree of warming remains uncertain. Efforts to mitigate global warming could lessen the economic hit.