It’s Too Hot
In the real world, parts of the globe have been experiencing heat waves and record temperatures, specifically in the Northern Hemisphere. This has created droughts spanning from California to China, creating some messy climate situations that don’t bode well for global economies.
On top of inflation, climate has played a major factor in rising prices. One example is something we’ve been talking about, which is energy in Europe. Russia’s shenanigans with the Nord Stream Pipeline paired with record heat in Europe is causing energy prices to skyrocket, and countries may be forced to ration energy to conserve for the winter. Drying rivers has also been a commonality in this recent global phenomenon, with dried rivers in Europe preventing hydropower from being generated and reducing shipping traffic. In China, hydropower remains an issue as demand for electricity might kill the grids, and crops that contribute to China’s economy are being affected too. Speaking of crops, the South has been hit hard by the heat as US farmers are expected to lose 40 percent of their cotton crop this year. A drought-ridden West has been dealing with this for a while, and this year marks the second year in a row where the Bureau of Reclamation flagged the Colorado River for a shortage due to low levels of water. Farms in Yuma, Arizona, a city along the Colorado River, are expected to lose 10 percent of their usual revenue, which consists of many vegetable plants. Reservoirs like Lake Mead are facing the same problem, and tourism is starting to take a hit due to the heat, hurting another industry. The worst part is that this can be attributed to climate change, which is going to get worse and worse. This could be another dent in the economy for the future, and steps need to be taken to prevent this.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
