Editorial selection · Money & Power
The Impact of El Niño on the U.S. Economy
Selected by Dylan Ratigan.
Article summary
The researchers use weather records going back to the 1950s to estimate how Pacific Ocean warming changes U.S. prices and payrolls. Past episodes sometimes lifted prices and employment together; the pattern challenges the assumption that higher prices necessarily mean stronger consumer demand.
Their historical model attributes about 0.3 percentage point of the spring-to-summer 2026 increase in the PCE price level to El Niño. Its larger 2027 estimate depends on a transition to La Niña.