Many closely followed economic models don't take into account the mounting costs of extreme weather caused by climate change, which might be accelerating faster than forecasters think.
Climate change is having a real impact, not just on the environment but on the economy too. And a growing body of research by economists and climate scientists shows that extreme weather will weigh on economic growth even more so in the future. But almost no mainstream economic forecasting model takes that into account, in an omission that some economists say could affect the accuracy of economic predictions going forward.
The most recent study to quantify the economic impact of the carbon emissions that spur climate change was featured last week in a brief by the Federal Reserve Bank of Richmond. By evaluating the performance of state economies in previous years, the report found that every one degree increase in average summer temperatures decreases annual state-level output growth by between 0.15 and 0.25 percentage points.cts is why don't obsess about climate change like they do about the impact of tax cuts or tariffs, which have relatively large short-term effects that dissipate over time.
That snowballs over time. If meaningful action isn't taken to curb emissions, US economic growth will be a third lower than it would otherwise have been by the end of this century — or sooner, if warming accelerates even faster than scientists currently anticipate. Theoretically, that means Americans will be poorer and have lower living standards as a result (on top of the the general disruptions to daily life caused by extreme weather events).
The long-term nature of those effects is why most Wall Street analysts don't obsess about climate change like they do about the impact of tax cuts or tariffs, which have relatively large short-term effects that dissipate over time.