Wednesday, April 29, 2015

Here's a point to ponder about Q1 GDP

BI - Q1 GDP growth was 0.2%.

Now, while some of the Q1 disappointment was because of continued European contraction, and some Q1 disappointment came from the oil patch collapse, a big chunk of the problem was the weather. Everything east of the Rockies was in a crippling deep-freeze for months on end.

I don't know the climate details, but if the recent trend toward crippling cold in the east is related to the continued drought in California, the north Pacific warm spot, and the recent trend toward expansion of the east Siberian snow pack in fall, then all these might be instances of climate shift..

If so, then we'll continue to see crippling cold in the eastern US every winter, which will mean a deviation of US GDP growth below trend, which means a permanent loss in output that grows over time. Same for a long-term drought in California: that'll mean a drop in US ag output and increase in costs to maintain cities.

If you're some sort of econometrics guy, you should easily be able to calculate the permanent loss in US economic output resulting from climate change. Now you have a price tag on pollution.

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