The Impact of El Niño on the U.S. Economy

Combining historical economic and meteorological data makes it possible to estimate the economic impacts of El Niño episodes. Such estimates suggest the current El Niño episode may have already caused a small temporary bump in U.S. price levels, which is expected to resolve by the end of the year. Estimates further suggest the episode poses meaningful risk for inflation to increase in 2027, alongside rising employment. These projected effects on inflation and employment add uncertainty to the economic outlook.