This summer, the US Energy Information Administration (EIA) projects that residential customers will see their monthly electricity bills average $173 from June to August, up from last summer's $168. This 3% increase is due to households consuming an additional 30 kilowatt hours of energy each month compared to last year. Some estimates predict an even sharper rise, with costs expected to be 8% higher from June to September compared to the previous year.

The Energy Hardship Report by the Center for Energy Poverty and Climate and the National Energy Assistance Directors Association revealed that in March, 34.3% of households reported forgoing basic necessities to cover their energy bills at least once in the past year. To understand the impact of rising cooling costs, we assume that 34.3% of American households, or nearly 44 million households, will reduce non-electricity spending by 3% from June to August.

Data Findings

The EIA estimates that the total increase in cooling costs per household for June-August will be $15. Consequently, around 44 million households cutting $15 in other spending to pay their power bills will result in a $660 million shift in the economy.

The sectors most affected by this shift include medical expenses and food, with restaurants, hospitals, doctor’s offices, and grocery stores feeling the brunt. This reduction in spending could lead to a $19 million loss in US GDP and threaten around 4,000 jobs, although this dip is expected to be temporary.

Based on 2022 data, the increased energy consumption for cooling supports jobs across various power sectors:

Conversely, the following industries will be negatively impacted due to reduced spending:

Future Implications

As living standards rise and climates warm, more households will use air conditioning. According to the National Weather Service, extreme heat causes more deaths annually than any other weather event, including floods, hurricanes, and tornadoes.

Increasing air conditioning use is both a cause and effect of climate change, creating a positive feedback loop. Transitioning to renewable energy sources is crucial, as is finding alternatives to high-global-warming-potential refrigerants. A 2022 report noted that cooling accounts for 10% of global electricity use and nearly 4% of annual greenhouse gas emissions. Emissions from air conditioning are split among electricity use for cooling (27%), reducing humidity (31%), and CFC-based refrigerants (37%). The remaining 5% is embodied in manufacturing and delivery.

Utilize IMPLAN For Your Analyses

The impacts of climate change, as illustrated by the rising costs of cooling during extreme heat, underscore the importance of understanding the broader economic implications of such trends. Whether you are a policymaker, business leader, or researcher, the ability to conduct detailed economic analyses is crucial for informed decision-making and strategic planning.

By leveraging the power of IMPLAN, you can stay ahead of economic trends and make a meaningful impact in your community and beyond. Schedule a demo today and join us in using data to drive better outcomes for a sustainable and resilient future.