Texans staying indoors due to extreme heat could cost the state’s economy $9.5 billion in lost business.
Texans staying indoors due to extreme heat could cost the state's economy $9.5 billion in lost business.
The Economic Consequences of Extreme Summer Heat in the US
As the summer heat sweeps across the United States, Americans are opting to stay indoors to beat the scorching temperatures. However, this change in behavior is not without its consequences. The impact of extreme heat is being felt not only by individuals, but also by businesses and the economy as a whole. From reduced economic activity to increased costs and health risks, the effects of this heatwave are far-reaching.
The state of Texas, in particular, is facing one of its hottest summers ever recorded. Small and midsize businesses in sectors like tourism, entertainment, and recreation, which heavily rely on outdoor activities, have witnessed a decline of around 20% in hours worked between mid-June and mid-July this year compared to previous years. This significant drop in economic activity has surprised experts, with the impact being likened to that of the ongoing COVID-19 pandemic.
The situation is compounded by the fact that many businesses had adapted to offer more outdoor options during the pandemic. The summer was anticipated to be a lucrative time for businesses as patrons could enjoy outdoor activities, but the extreme heat has reversed this expectation. Instead of enjoying the outdoors, people are now seeking refuge from the scorching temperatures, causing a direct negative impact on business revenues.
If the heat continues as predicted until the end of the summer, Texas could face a staggering $9.5 billion hit to its gross state product, equivalent to a 0.47% lower growth rate. This projected loss has significant implications not only for businesses but also for the state’s overall economy.
Jonathan Horowitz, Chief Revenue and Strategy Officer at Buffalo Bayou Brewing in Houston, reported a 10% decrease in revenue compared to the same period last year. This decline is reflective of the broader challenges faced by businesses due to prolonged extreme heat. Additionally, industries like farming are at risk, with animals and crops suffering from the adverse impact of high temperatures and limited water supply.
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Beyond Texas, the effects of extreme heat are being felt nationwide. Americans are experiencing an increased financial burden as they try to stay cool. The National Energy Assistance Directors Association estimates that home energy bills will rise by 11.7% this summer, reaching an average of $578 compared to $517 last year.
Extreme heat not only affects financial expenses but also poses a significant risk to individuals’ health and safety. Research shows that individuals experiencing heat stress are more prone to accidents, leading to potential medical bills and incapacitation that can disrupt business operations. It is essential for employers to invest in measures to protect their employees, such as rearranging shifts or implementing changes in uniform colors, as these investments pay off in terms of increased productivity in the long run.
Arizona, in particular, is facing a prolonged heatwave with temperatures exceeding 110 degrees for nearly a month. The impact on residents is severe, with higher electricity bills and increased risk of emergency room visits. A prolonged power failure caused by the heat could send nearly 800,000 Phoenix residents to the emergency room. In 2021 alone, extreme heat in Phoenix resulted in $7.3 million in hospitalizations and emergency room visits, a number that is likely to rise this year, according to the Nature Conservancy.
In New Orleans, residents are taking precautions to avoid the dangerous heat, which has already claimed lives. According to a report by the Louisiana Department of Health, an average of 320 workers end up in the emergency room each year due to heat-related illnesses. With temperatures reaching well over 100 degrees, this number is expected to increase during this summer.
The economic consequences of extreme summer heat are felt nationwide, affecting individuals and businesses alike. Workers are often forced to stay home or reduce their working hours, leading to diminished economic activity. As businesses struggle to adapt to these challenging conditions, the cost of staying cool becomes increasingly burdensome for many Americans.
If you are personally experiencing the effects of extreme heat by staying home or working fewer hours, feel free to reach out to these reporters at [email protected] and [email protected]. Stay safe and cool!
