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Historic Summer Heat Costs Texas’ Economy $24B

August was the state’s second-hottest month on record in Dallas-Fort Worth, with the average temperature of 92.9 degrees. The heat’s impact on the state’s GDP is twice as pronounced as the change for the rest of the country.

construction workers seek refuge from the heat in a large pipe
Thalle Construction Company workers J. ReFugio Perez, top left, Lupe Aranda, Prudencio Guevara-Rangel, Oscar Perez, Alberto Cardenas, and Jose Martinez, far right, sought refuge from the heat in a large pipe during their lunch break on June 28, 2023, near the intersection of North Riverfront Boulevard and Continental Avenue in Dallas.
(Irwin Thompson/The Dallas Morning News/TNS)
The relentless summer heat pushed everything to its brink. It led to the death of more than 20 people in Dallas and Tarrant counties, to trees suddenly losing limbs and stressed the state’s energy grid as electric demand soared.

The historic temperatures this summer also tested Texas’ economy. The heat likely reduced the state’s gross domestic product by as much as $24 billion, according to a new analysis by Federal Reserve Bank of Dallas researchers.

With temperatures lingering in the triple digits, some companies had a harder time supplying goods and consumers spent less.

“Anecdotally, everyday behavior in Texas changed during the summer of 2023 as the heat bore down,” researchers wrote in the report.

August was the second-hottest month on record in Dallas-Fort Worth, according to the National Weather Service, with an around-the-clock average of 92.9 degrees.

Other calculations suggest a lesser impact on the economy. The Perryman Group, an economic analysis firm, estimated in July that the summer heat would cost the state’s economy $9.5 billion in real gross product.

The Fed’s researchers noted that higher temperatures in the spring and more temperate fall and winters charge economic activity, with agricultural and real estate industries benefitting from springs that warm sooner, according to the study.

“Some retailers said the continuation of unseasonably hot weather was a factor behind the slump,” the Fed said in a separate report released Wednesday.

Leisure and hospitality businesses report being the hardest hit by the heatwave, according to the reserve’s Texas Business Outlook Surveys. The sector was followed by transportation services and retail.

The heat wave led to lower customer demand, less activity in temperature-sensitive worksites and reduced labor productivity, survey respondents indicated, which in turn drove down revenue and production.

The impact of the heat on the state’s GDP is twice as pronounced as the change in the rest of the U.S., Fed researchers found, because Texas summers are generally hotter in comparison to the rest of the country.

The number of 100-degree days is expected to almost double by 2036 compared with the previous two decades, especially in urban areas, forcing local industries to make long-term changes to their summer operations, according to the report.

“As climate change’s effects intensify over the next decades, heat waves will become more commonplace and severe,” researchers said in the report. “However, the economy can adapt.”

For example, Six Flags in Arlington added cabanas to provide additional shade to protect customers from the heat, the researchers noted.

“Communities may also adopt new technology to become more sustainable, create walkable neighborhoods or retrofit existing buildings to improve energy efficiency,” researchers said.

©2023 The Dallas Morning News. Distributed by Tribune Content Agency, LLC.

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