Research has found that extreme heat can directly hurt economic growth.
For example, a 2018 study found that the economies of U.S. states tend to grow at a slower pace during relatively hot summers. The data shows that annual growth falls 0.15 to 0.25 percentage points for every 1 degree Fahrenheit that a state’s average summer temperature was above normal.
Laborers in weather-exposed industries such as construction work fewer hours when it’s hotter. But higher summer temperatures reduce growth in many industries that tend to involve indoor work, including retail, services and finance. Workers are less productive when it’s hotter out.
2. Crop yields drop
Agriculture is obviously exposed to weather: After all, crops grow outdoors.
While temperatures up to around 85 F to 90 F (29-32 C) can benefit crop growth, yields fall sharply when thermostats rise further. Some of the crops hit hard by extreme heat include corn, soybeans and cotton. These reductions in yields could be costly for U.S. agriculture.
For example, a recent study I conducted found that an additional 2 degrees Celsius of global warming would eliminate profits from an average acre of farmland in the Eastern U.S.
A prominent example of this was the collapse of the Russian wheat harvest in response to the country’s 2010 heat wave, which raised wheat prices throughout the world.
A 2011 study found that just one extra day with temperatures above 90 F increases annual household energy use by 0.4%. More recent research shows that energy use increases the most in places that tend to be hotter, probably because more households have air conditioning.
This increase in electricity use on hot days stresses electric grids right when people depend on them most, as seen in California and Texas during recent heat waves. Blackouts can be quite costly for the economy, as inventories of food and other goods can spoil and many businesses either have to run generators or shut down. For instance, the 2019 California blackouts cost an estimated $10 billion.
4. Education and earnings suffer
A long-term impact of increasingly hotter weather involves how it affects children’s ability to learn – and thus their future earnings.
Research has shown that hot weather during the school year reduces test scores. Math scores decrease more and more as the temperature rises beyond 70 F (21 C). Reading scores are more resistant high temperatures, which this research claims is consistent with how different regions of the brain respond to heat.
One study suggested that students in schools that lack air conditioning learn 1% less for every 1 degree Fahrenheit increase in the school year’s average temperature. It also found that minority students are especially affected by hotter school years, as their schools are especially likely to lack air conditioning.
The impact of extreme heat on development, in fact, begins before we’re even born. Research has found that adults who were exposed to extreme heat as fetuses earn less during their lifetimes. Each extra day with average temperature above 90 F (32 C) reduces earnings 30 years later by 0.1%.
Air conditioning can help – to a point
Air conditioning can offset some of these effects.
Not everyone has air conditioning, however, especially in normally cooler areas like Oregon, Washington and Canada that have experienced unusually extreme temperatures this year. And many people can’t afford to own or operate them. Survey data from 2017 found that around half of homes in the Pacific Northwest
lacked air conditioning. And about 42% of U.S. classrooms lack an air conditioner.
While heat waves are shown to induce more households to install air conditioning, it’s hardly a panacea. By 2100, higher use of air conditioning could increase residential energy consumption by 83% globally. If that energy comes from fossil fuels, it could end up amplifying the heat waves that caused the higher demand in the first place.
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And in the U.S. South, where air conditioning is omnipresent, hotter-than-usual summers take the greatest toll on states’ economic growth.
In other words, as temperatures rise, economies will continue to suffer.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
