[Economics] How Hotter Weather Stresses US Small Businesses

[-_-Moltres-_-]

 

I’m Chris Anstey, a senior editor in Boston, and today we’re looking at reporting by Saleha Mohsin, Julia Press and Catarina Saraiva on the weather’s impact on small businesses. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X via @economics. And if you aren’t yet signed up to receive this newsletter, you can do so here. Top Stories The US is poised to unveil a decision on China tariffs next week. The Bank of England signaled it was closing in on rate cuts, and Britain bounced back from recession. Japan’s households cut spending as sticky inflation drags on sentiment. Feeling the Heat Climate change is a constant condition for our planet. Where it causes trouble for animals and plants is when it happens very quickly — leaving species not enough time to adapt and survive.Something similar may be an underappreciated risk in the economic world. Small businesses, which account for almost half of the US workforce and more than 45% of GDP, are finding it increasingly difficult to cope with hotter-for-longer summers, as reported in our latest Big Take DC podcast. Listen to the podcast here. Take Cherryshack Orchard, a pick-your-own fruit farm near Spokane, Washington. The Pacific Northwest isn’t a region known for extreme heat. But that’s changing. Owner Brad Erovick says there’s now “very dry and high heat for almost all summer,” with multi-day stretches of temperatures above 105 Fahrenheit (41 Celsius). That’s different from when the business began 17 years ago, he says. The heat not only leaves customers less eager to go out and pick fruit, it also contributes to wildfires — which further reduce foot traffic. It’s unclear what will happen if the summer temperatures just keep climbing. “It's a question that's looming, I guess,” Erovick says.Even places accustomed to heat face challenges. Like Texas, which had an unusually powerful heat wave last summer. Small businesses including restaurants were hit with a double-whammy: a surge in the cost of electricity thanks to the increased demands on the state’s power grid from air-conditioning use and a decline in revenue as more customers stayed home. Emily Kerr, an economist at the Federal Reserve Bank of Dallas, says one Houston restaurant reported the worst customer traffic it had experienced since it opened in 1967. Services businesses aren’t the only ones to feel the effects. Manufacturers are also hit, via weaker productivity, Kerr says. Temperature-sensitive worksites are particularly vulnerable. More broadly, “manufacturing companies were having to give workers more breaks” to allow them to recover from extra exertion in hotter conditions, she says.Net losses to the Texas state economy from last year’s heat wave amounted to $9.5 billion, according to estimates by Ray Perryman, who runs an economic research firm out of Waco, Texas. Hot weather might not have been a traditional concern for economists. But it’s becoming apparent that, for a swath of the economy, it will become an increasingly important consideration.

https://www.bloomberg.com/news/newsletters/2024-05-10/world-economy-latest-climate-change-and-small-businesses?srnd=homepage-europe