Dallas Fed says summer heat wave may have cost Texas businesses $24 billion

The record-breaking heat in the summer of 2023 put a real drain on the finances of businesses across North Texas, according to the Federal Reserve Bank of Dallas.

The Dallas Fed said the intensely hot weather likely reduced Texas' GDP by 1% (or as much as $24 billion) because people spent less and some companies had a harder time supplying goods.

The findings were part of a report on the Southwest Economy by researchers at the Dallas Fed.

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

Researchers said the weather's impact on Texas GDP growth was twice as pronounced compared to the rest of the country.

"The effect of rising summer temperatures on job growth is another potential concern, but the impact has been more subdued compared to the hit to GDP," the Dallas Fed said.

On the flip side, the Dallas Fed said good spring weather and more normal fall temperatures helped spur spending.

"The agricultural and real estate industries, in particular, have benefitted from springs that warm sooner," according to the report.

The Dallas Fed cautions that heat waves are expected to intensify in the coming decades, with the number of 100-degree days expected to nearly double by 2036 (compared to the previous two decades).

“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.”