How this year's Super El Niño could impact the economy

Congress is coming back to a brisk D.C. fall, with cool but not frigid temperatures. It’s pretty typical weather for this time of year. But weather and climate experts are bracing for what's likely to be a very atypical fall and winter, due to the fact that we're in the midst of what's being called a "Super El Niño."

That's the amped-up version of a natural cycle when unusually warm water in the central and eastern Pacific Ocean can disrupt weather patterns around the world. Some communities have already experienced more severe weather linked to the Super El Niño and are facing economic consequences, as a result.

“How We Survive" host Amy Scott recently joined “Marketplace Morning Report” host Kimberly Adams for more. The following is an edited transcript of their conversation.

Kimberly Adams: Amy, what do we know about how this Super El Niño could affect the economy?

Amy Scott: Well, globally, it could be a massive impact. One study from the Peterson Institute for International Economics estimates if the intensity is similar to the last super El Niño we had in the late 1990s, the economic damage could be close to a trillion dollars next year. And that comes from the physical damage caused by extreme temperatures, flooding, and drought; crop destruction; supply chain disruptions; and, of course, reduced investment and slower economic growth. And it'll hit lower- and middle-income countries in the tropics especially hard. Here in the U.S., though, the San Francisco Federal Reserve estimates it could add one percentage point to inflation throughout 2027. So we're definitely going to feel this over the coming year.

Adams: And we've already felt it in some parts of the country. I understand we've already seen some impacts of El Niño in California.

Scott: Yeah, there have been several coastal flooding events in California. In fact, just a few weeks ago, "How We Survive" producer Hayley Hershman was on the ground in Long Beach after a series of intense waves from Tropical Storm Rachel pummeled homes along the coast. Here's what we heard from some residents gathered on the beach assessing the damage.

Robert Winter: The homes got hit, and some of them are actually crumbling away.

Philip Perez: I've never seen it like this. It looks crazy.

Jasmine Evers: We feel our house shake every 30 seconds. It's like a little mini earthquake.

Scott: That was Robert Winter, Philip Perez, and Jasmine Evers there. And California is now bracing for the first atmospheric river of this El Niño. One risk analytics firm, ClimateX, estimates that El Niño could cause $2 billion to $3 billion in losses from flooding and mudslides in California this winter.

Adams: Amy, what about any positive effects? I see that a lot of these areas that are expected to get a bunch of precipitation have been dealing with extreme drought. So, are there some potential upsides?

Scott: Yeah. Well, for example, here in Colorado, we've just come out of one of the worst water years on record, with the lowest winter snowpack in history and severe drought conditions across the state. So, many are counting on a much wetter year, especially the ski industry, which would love to have more snow. But with El Niño often comes too much of a good thing, and you've been seeing that with recent severe flooding in southern Colorado and the Four Corners area and other parts of the Southwest. That rainfall has caused a lot of damage. It has also alleviated some of the deficits in our reservoirs. By no means is this going to solve the Western water crisis. It does bring some relief, but I think we'd all prefer if it happened a little more gradually.