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U.S. Hiring Slowed to 143,000 Jobs in January

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U.S. employers added 143,000 jobs last month, somewhat fewer than forecast, while unemployment fell to 4 percent and hourly earnings rose.Can a labor market be hot and cool at the same time? That’s the picture painted by the latest federal hiring figures, which show a step down in job creation last month — as well as a drop in joblessness.Employers added 143,000 jobs in January, slightly fewer than expected, the Labor Department reported on Friday. But with large upward revisions to the prior two months and a decline in the unemployment rate to 4 percent, American workers still appear to be in good shape.“We have robust fundamentals, and relatively moderate hiring, but it’s very judicious,” said Gregory Daco, the chief U.S. economist with the accounting firm EY-Parthenon. “The unemployment rate is historically low, but frozen in the sense that you’re not seeing much churn — businesses are being cautious as to how they manage their work force.” More

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    Economic Toll of Los Angeles Fires Goes Far Beyond Destroyed Homes

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    The ongoing disaster will affect residents’ health, local industries, public budgets and the cost of housing for years to come.After decades of mounting damage from climate-fueled natural disasters, researchers have compiled many misery-filled data sets that trace the economic fallout over weeks, months and years.The fires still burning in Los Angeles are sure to rank among America’s most expensive — but there is no perfect analogue for them, making it difficult to forecast the ultimate cost.The main reason is that wildfires have typically burned in more rural locations, consuming fewer structures and attacking smaller metropolitan areas. The Los Angeles conflagration is more akin to a storm that hits a major coastal city, like Houston or New Orleans, causing major disruption for millions of people and businesses.“It looks a lot more like the humanitarian situation from a flood or a hurricane than a wildfire that people are watching in the hills,” said Amir Jina, an assistant professor at the University of Chicago’s Harris School of Public Policy, who has studied the economic impact of climate change.On the other hand, several mitigating factors could lead to lower costs and a stronger rebound relative to other places. The cinema capital’s wealth and industrial diversity, along with other natural advantages from geography and weather, may allow Los Angeles to stave off a worst-case scenario.Estimating the likely economic losses is tricky at this stage. The weather data company AccuWeather has offered a figure of $250 billion to $275 billion, though a Goldman Sachs report said it found the estimate high. (Declining to provide a breakdown because its methodology is “proprietary,” AccuWeather said it considered many factors including long-run health impacts as well as short-term losses in the value of public companies exposed to the disaster.)We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    California’s Insurance System Faces Crucial Test as Wildfire Losses Mount

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    It’s too soon to know how the Los Angeles fires will change life in California, but it may heavily depend on the answer to a single question: Will a once-obscure insurance program run out of money?That program, the California FAIR Plan, was created by state lawmakers in 1968 to cover people who couldn’t get standard home insurance for various reasons. But as climate change makes wildfires more frequent and intense, causing commercial insurance companies to pull back from the state, the rapidly growing FAIR Plan has become the linchpin holding together California’s increasingly fragile insurance market.Because of the fires that started last week, that linchpin may be about to break, with consequences that would reverberate throughout California’s economy.As of last Friday, the FAIR Plan had just $377 million available to pay claims, according to the office of Senator Alex Padilla, Democrat of California. It’s not yet known how much in claims the plan will face but the total insured losses from the fires so far has been estimated at as much as $30 billion. Because the fires are still burning, that number could grow.Unlike regular insurance companies, the FAIR Plan can’t refuse to cover homes just because they’re in vulnerable areas. As a result, as the risk of wildfires grows, homes deemed too dangerous by major insurers have been piling up on the FAIR Plan’s books.Between 2020 and 2024, the number of homes covered by the plan more than doubled, to almost half a million properties with a value that tripled to about half a trillion dollars.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Here’s Where Climate Change Is Driving Up Home Insurance Rates

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    Source: Keys and Mulder, National Bureau of Economic Research (2024) Note: State average is shown in counties with few or no observations. Enid, Okla., surrounded by farms about 90 minutes north of Oklahoma City, has an unwelcome distinction: Home insurance is more expensive, relative to home values, than almost anywhere else in the country. Enid […] More

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    As Wildfires Grow Fiercer, Some Companies Look to Rebuild the Tree Supply Chain

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    As forests succumb to ever-fiercer wildfires, the federal government and some adventurous private companies are trying to resuscitate an industry.When it came to wildfires, 2021 was an increasingly common kind of year in Montana: Flames consumed 747,000 acres, an area nearly the size of Long Island.About 2,700 of those acres were on Don Harland’s Sheep Creek Ranch, where ever-drier summers have turned lodgepole pines into matchsticks ready to ignite. After the smoke cleared, Mr. Harland found creeks running black with soot and the ground hardening more with every day that passed.A former timber industry executive, Mr. Harland knew the forest wouldn’t grow back on its own. The land is high and dry, the ground rocky and inhospitable — not like the rainy coastal Northwest, where trees grow thick and fast. Nor did he have the money to carry out a replanting operation, since growing for timber wouldn’t pay for itself; most of the nearby sawmills had shut down long ago anyway. The state government offered a few grants, but nothing on the scale needed to heal the scar.Then a local forester Mr. Harland knew suggested he get in touch with a new company out of Seattle, called Mast. After visiting to scope out the site, Mast’s staff proposed to replant the whole acreage, free, and even pay Mr. Harland a bit at the end. Mast, in turn, was to earn money from companies that wanted to offset their carbon emissions and would put millions of dollars into planting trees that otherwise wouldn’t exist.Mr. Harland said he had his doubts about the carbon-selling part of the plan, but he was impressed with Mast’s operations, so he said yes.Two years later, after seeds had been collected from similar trees on nearby lands, crews of planters came out with bags full of seedlings, rapidly plunking them into the ashen ground. As part of the deal, Mr. Harland signed an agreement to let the trees grow for at least 100 years, so they can keep sucking greenhouse gases out of the air as they mature.Can carbon credits help rebuild a forest? Tell us what you think. More

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    Maui Economy, 6 Months After Wildfire, Is Still Reeling

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    Twisted and charred aluminum mixed with shards of glass still lines the floor of the industrial warehouse where Victoria Martocci once operated her scuba diving business. After a wildfire tore through West Maui, all that remained of her 36-foot boat, the Extended Horizons II, were a pair of engines.That was six months ago, but Ms. Martocci and her husband, Erik Stein, who are weighing whether to rebuild the business, which he started in 1983, said the same questions filled their thoughts. “What will this island look like?” Ms. Martocci asked. “Will things ever be close to being the same?”In early August, what began as a brush fire burst into the town of Lahaina, a popular tourist destination, all but leveling it, destroying large swaths of West Maui and killing at least 100 people in the nation’s deadliest wildfire in more than a century.The local economy remains in crisis.Rebuilding the town, according to some estimates, will cost more than $5 billion and take several years. And tense divisions still remain over whether Lahaina, whose economy long relied almost entirely on tourism, should consider a new way forward.Debates about the ethics of traveling to decimated tourist destinations played out on social media after an earthquake in Morocco and wildfires in Greece last year. But the situation is particularly dire for Maui.State and federal officials scrambled last summer to find shelter for thousands of residents who had lost their homes, relocating people to local hotels and short-term rentals where many still live, often sharing a wall with vacationing families whose realities feel far from their own. Other displaced residents live in tents on the beach, and some restaurant owners pivoted to working out of food trucks.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    In Provence, Winemakers Confront Climate Change

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    “You can taste the climate change.”Frédéric Chaudière, a third-generation winemaker in the French village of Mormoiron, took a sip of white wine and set down his glass.The tastes of centuries-old varieties are being altered by spiking temperatures, scant rainfall, snap frosts and unpredictable bouts of extreme weather. The hellish summer was the latest reminder of how urgently the $333 billion global wine industry is being forced to adapt. Temperature records were set in Europe, the United States, China, North Africa and the Middle East as hail, drought, wildfires and floods on a biblical scale inflicted damage.Grape vines are some of the most weather-sensitive crops, and growers from Australia to Argentina have been struggling to cope. The imperative is particularly great in Europe, which is home to five of the world’s top 10 wine-producing countries and includes 45 percent of the planet’s wine-growing areas.Chêne Bleu is one of the highest vineyards in Provence, France. Winegrowers have been increasingly searching for higher altitudes for cooler temperatures. For many vineyards, new weather patterns are resulting in smaller grapes that produce sweeter wines with a higher alcohol content.A tractor driver loading grapes picked by harvesters. Chêne Bleu is one of the region’s leaders in developing adaptations for cultivation and processing that are regenerative and organic.Mr. Chaudière is the president of an association of wine producers in Ventoux. His winery, Château Pesquié, is in the Rhône Valley, where the impact of climate change over the past 50 years on winegrowers has been significant.The first burst of buds appear 15 days earlier than they did in the early 1970s, according to a recent analysis. Ripening starts 18 days earlier. And harvesting begins in late August instead of mid September. Change was expected, but the accelerating pace has come as a shock.For many vineyards, the new weather patterns are resulting in smaller grapes that produce sweeter wines with a higher alcohol content. These developments, alas, are out of step with consumers who are turning to lighter, fresher tasting wines with more tartness and less alcohol.For other vineyards, the challenges are more profound: Dwindling water supplies threaten their existence.How to respond to these shifts, though, is not necessarily clear.A harvester clipping clusters by hand and dropping them into round baskets, which are then moved into trucks.Emergency irrigation, for example, can save young vines from dying when the heat is scorching. Yet over the long haul, access to water near the surface means the roots may not drill down deep into the earth in search of the subterranean water tables they need to sustain them.Chêne Bleu, a small and relatively new family winery on La Verrière, the site of a medieval priory above the village of Crestet, is one of the region’s leaders in developing adaptations for cultivation and processing that are regenerative and organic.“We’re all going to get whacked by similar weather challenges,” said Nicole Rolet, who inaugurated the winery in 2006 with her husband, Xavier.In her view, there are two responses to climate change: You can fight it with chemicals and artificial additives that battle nature, she said, or “you can create a balanced functioning of the ecology through biodiversity.”Gardeners tending to the fruit and vegetable quarter. Scientists have found that expanding the variety of plants and animals can reduce the impact of shifting climate on crops. Between the rows, grasses blanket the ground. They help manage erosion, retain water, enrich the soil, capture more carbon and control pests and disease.There is a bee colony on the property to increase cross-pollination. The natural approach was on display one morning as harvesters slowly inched down the rows of vines, clipping plump purple clusters of Grenache grapes by hand.Stationary wooden pickets have been replaced by a trellising system that can be adjusted upward as vines grow so that their leaves can be positioned to serve as a natural canopy to shade grapes from a burning sun.Between the rows, grasses blanket the ground. They are just some of the cover crops that have been planted to help manage erosion, retain water, enrich the soil, capture more carbon and control pests and disease.Scientists have found that expanding the variety of plants and animals can reduce the impact of shifting climate on crops, highlighting, as one study put it, “the critical role that human decisions play in building agricultural systems resilient to climate change.”Surrounding Chêne Bleu’s emerald fields are wildflowers, a wide range of plant species and a private forest. There is a bee colony to increase cross-pollination and a grove of bamboo to naturally filter water used in the winery.Sheep provide the manure for fertilizer. The vineyard also dug a muddy pool — nicknamed the “spa” — for roaming wild boar, to lure them away from the juicy grapes with their own water supply.The Rolets have teamed up with university researchers to experiment with cultivation practices. And they are compiling a census of animal and plant species, including installing infrared equipment to capture rare creatures like a genet, a catlike animal with a long, ringed tail.“People are formally and informally doing experimental work, promoting best practices,” Ms. Rolet said, as she sat in a grand dining hall topped by stone archways at the restored priory. “It’s surprisingly hard to do.”“No one has time or money to take nose off the grindstone to look at what someone is doing on the other side of the world,” she explained.Harvesters sifting through grapes on a conveyor belt in the winery, looking to pick out stray leaves or bad grapes.At the winery, the morning’s harvest is emptied onto a conveyor belt, where workers pick out stray leaves or damaged berries before they are dropped into a gentle balloon press. The golden juice drips down into a tray lined with dry ice, producing vaporous swirls and tendrils. The ice prevents bacterial growth and eats up the oxygen that can ruin the flavor.Chêne Bleu has several advantages that many neighboring vineyards don’t. Its 75 acres are relatively isolated and located in a Unsesco biosphere reserve, a designation aimed at conserving biodiversity and promoting sustainable practices. Because it is situated on a limestone outcropping on the ridge of a tectonic plate, the soil contains ancient seabeds and a rich combination of minerals. And, at 1,600 feet, it is one of the highest vineyards in Provence.Winegrowers have been increasingly searching for higher altitudes because of cooler nighttime temperatures and shorter periods of intense heat. In Spain’s Catalonia region, the global wine producer Familia Torres has in recent years planted vineyards at 3,000 to 4,000 feet up.An assistant winemaker. A cellar assistant cleaning equipment.The wine cellar with barrels made of French oaks.Chêne Bleu has other resources. Mr. Rolet, a successful businessman and former chief executive of the London Stock Exchange, has been able to finance the vineyard’s cutting edge equipment and experiments. A larger marketing budget enables the vineyard to take chances others might not want to risk.The Rolets, for example, chose to sometimes bypass traditional appellations — legally defined and protected wine-growing areas — to experiment with more varieties for their high-end offerings.Although the wine map has changed, France’s strict classification system has not. Appellations were instituted decades ago to ensure that buyers knew what they were purchasing. But now, those definitions can limit the type of varieties that farmers can use as they search for vines that can better withstand climate change.Dry ice being added to the press pan to help protect the juice from oxygen. The juice drips down into a tray lined with dry ice, which prevents bacterial growth and eats up the oxygen that can ruin the flavor.“There is a big, frustrating lag time between what the winemakers are experiencing and what the authorities are doing,” said Julien Fauque, the director of Cave de Lumières, a cooperative of roughly 50 winegrowers who farm 450 hectares of land in the Ventoux and Luberon areas.Climate change may mean that growers must reconsider once unthinkable practices.Adding tiny amounts of water could reduce the alcoholic content and prevent fermentation from stalling, he said, but the practice, strictly forbidden across the European Union, could land a winemaker in prison. California, by contrast, allows such additions.There is flexibility in the system, said Anthony Taylor, the director of communications at Gabriel Meffre in Gigondas, one of the larger wineries in southern Rhône. But “they’re on a wire,” he said of official regulators. “They want to preserve as much as possible a profile that is successful, and they’re also listening to the other side, which argues we need to change things or introduce new varieties.”The pace of change, though, is accelerating, Mr. Taylor said: “The speed at which we’re moving is quite frightening.”A chef uses only local products, mainly from the vegetable garden on the estate.Harvesters taking a lunch break before returning to work.Chêne Bleu is on La Verrière, the site of a medieval priory. More

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    Canada Offers Lesson in the Economic Toll of Climate Change

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    Wildfires are hurting many industries and could strain households across Canada, one of many countries reckoning with the impact of extreme weather.Canada’s wildfires have burned 20 million acres, blanketed Canadian and U.S. cities with smoke and raised health concerns on both sides of the border, with no end in sight. The toll on the Canadian economy is only beginning to sink in.The fires have upended oil and gas operations, reduced available timber harvests, dampened the tourism industry and imposed uncounted costs on the national health system.Those losses are emblematic of the pressure being felt more widely as countries around the world experience disaster after disaster caused by extreme weather, and they will only increase as the climate warms.What long seemed a faraway concern has snapped into sharp relief in recent years, as billowing smoke has suffused vast areas of North America, floods have washed away neighborhoods, and heat waves have strained power grids. That incurs billions of dollars in costs, and also has longer-reverberating consequences, such as insurers withdrawing from markets prone to hurricanes and fires.In some early studies of the economic impact of rising temperatures, Canada appeared to be better positioned than countries closer to the Equator; warming could allow for longer farming seasons and make more places attractive to live in as winters grow less harsh. But it is becoming clear that increasing volatility — ice storms followed by fires followed by intense rains and now hurricanes on the Atlantic Coast, uncommon so far north — wipes out any potential gains.“It’s come on faster than we thought, even informed people,” said Dave Sawyer, principal economist at the Canadian Climate Institute. “You couldn’t model this out if you tried. We’ve always been concerned about this escalation of damages, but seeing it happen is so stark.”Nonetheless, Mr. Sawyer and his colleagues did try to model it out. In a report last year, they calculated that climate-related costs would mount to 25 billion Canadian dollars in 2025, cutting economic growth in half. By midcentury, they forecast a loss of 500,000 jobs, mostly from excessive heat that lowers labor productivity and causes premature death. Then there are the increased costs to households, and higher taxes required to support government spending to repair the damage — especially in the north, where thawing permafrost is cracking roads and buildings.The recent fires have forced some lumber mills to idle. It’s not clear how widespread the damage will be to forest stocks.Jen Osborne for The New York TimesIt is too early to know the cost for the current fires, and several months of fire season remain. But the consulting firm Oxford Economics has forecast that it could knock between 0.3 and 0.6 percentage points off Canada’s economic growth in the third quarter — a big hit, especially since hiring in the country has already slowed and households have more debt and less savings than their neighbors to the south.“We already think we’re teetering into a downturn, and this would just make things worse,” said Tony Stillo, director of economics for Canada at Oxford. “If we were to see these fires really disrupt transportation corridors, disrupting power supply to large population centers, then you’re talking about even worse consequences.”Estimates of the overall economic drag are built on damage to particular industries, which vary with each disaster.The recent fires have left some lumber mills idle, for example, as workers have been evacuated. It’s not clear how widespread the damage will be to forest stocks, but provincial governments tend to reduce the amount of timber they allow to be harvested after large blazes, according to Derek Nighbor, chief executive of the Forest Products Association of Canada. Infestations of pine beetles, which have flared up as milder winter temperatures fail to kill off the pests, have curtailed logging in British Columbia.Although lumber prices have been depressed in recent months as higher interest rates have weighed on home construction, Canada is confronting a housing shortage as it works to bring in millions of new immigrants. Reduced availability of wood will make its housing problem more difficult to solve. “It’s safe to say there’s going to be a supply crunch in Canada as we work through this,” Mr. Nighbor said.The tourism industry is also being hit, as the fires erupted just as operators were going into the crucial summer season — sometimes far from the fires. Business plunged in the peninsula town of Tofino, a popular destination for whale watching off Vancouver Island, when its only highway access was cut off by a fire two hours away. The road has since reopened, but only one lane at a time, and drivers need to wait up to an hour to get through.Sabrina Donovan is the general manager of the Pacific Sands Beach Resort and the chair of Tofino’s local tourism promotion organization. She said that her hotel’s occupancy sank to about 20 percent from 85 percent in the course of June, and that few bookings were coming through for the rest of the year. Employers commonly house their staff during the summer, but after weeks without customers, many workers left for jobs elsewhere, making it difficult to maintain full service in the coming months.“This most recent fire has been pretty devastating for the majority of the community,” Ms. Donovan said, noting that the coast had never in her career had to deal with wildfires. “This is something we now have to be thinking about in the future.”The wildfires could depress spending when households are already strained.Jen Osborne for The New York TimesRegardless of the severity of any particular episode, the costs mount as disasters get closer to critical infrastructure and population centers. That is why the two most expensive years in recent history were 2013, when major flooding hit Calgary, and 2016, when the Fort McMurray fire wiped out 2,400 homes and businesses and hamstrung oil and gas production, the area’s main economic driver.This year, most of the burning has been in rural areas. While some oil drilling has been disrupted, the damage overall to the oil industry has been minor. The greater long-term threat to the industry is falling demand for fossil fuels, which could displace 312,000 to 450,000 workers in the next three decades, according to an analysis by TD Bank.But there is still a long, hot summer ahead. And the insurance industry is on alert, having watched the increasing damage in recent years with alarm. Before 2009, insured losses in Canada averaged around 450 million Canadian dollars a year, and now they routinely exceed $2 billion. Large reinsurers pulled back from the Canadian market after several crippling payouts, increasing prices for homeowners and businesses. That is not even counting the life insurance costs likely to be incurred by excessive heat and smoke-related respiratory ailments.Craig Stewart, vice president of federal affairs for the Insurance Bureau of Canada, said climate issues had become a primary concern for the organization over the past decade.The mounting cost of catastrophic events in CanadaPayouts including adjustment expenses by property and casualty insurers for disasters that total more than $30 million, in 2021 Canadian dollars.

    Source: Insurance Bureau of CanadaBy The New York Times“Back in 2015, we sent our C.E.O. across the country to talk about the need to prepare for a different climate future,” Mr. Stewart said. “At the time, we had the Calgary floods two years before in the rear view mirror. We thought, ‘Oh, we’ll get another event in two to three years.’ We never could’ve imagined that we’re now seeing two or three catastrophic events in the country per year.”That’s why the industry pushed hard for the Canadian government to come up with a comprehensive adaptation strategy, which was released in late June. It recommends measures like investing in urban forests to reduce the health effects of heat waves and developing better flood maps that help people avoid building in vulnerable areas. Fire and forestry experts have called for the forest service, decimated by years of austerity, to be restored, and prescribed burns to be scaled up — all of which costs a lot of money.Mike Savage, the mayor of Halifax, doesn’t have to be convinced that the spending is necessary. His city was the largest to sustain fire losses this spring, with 151 homes burned. That calamity came on the heels of Hurricane Fiona last year, which submerged much of the coastline. Mr. Savage worries about the fate of the isthmus that connects Nova Scotia to New Brunswick, and the power systems that now peak in the hot summer instead of the frigid winter.“I certainly believe that when you invest in mitigation there’s a dramatic positive impact from those investments,” Mr. Savage said. “It’s going to be a challenging time. To think we got through this fire and say, ‘OK, that’s good, we’re done,’ that would be a little bit naïve.” More

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    Biden Warns That Climate Change Could Upend Federal Spending Programs

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    A chapter in the new Economic Report of the President focuses on the growing risks to people and businesses from rising temperatures, and the government’s role in adapting to them.WASHINGTON — The Biden administration warned on Monday that a warming planet posed severe economic challenges for the United States, which would require the federal government to reassess its spending priorities and how it influenced behavior.Administration economists, in an annual report, said that reassessment should include a new look at the climate-adaptation implications of aid to farmers, wildland firefighting and wide swaths of safety-net programs like Medicaid and Medicare, as the government seeks to shield the poorest Americans from suffering the worst effects of climate change.The White House Council of Economic Advisers also warned that, left unchanged, federal policies like fighting forest fires and subsidizing crop insurance for farmers could continue to encourage Americans to live and work in areas at high risk of damage from warming temperatures and extreme weather — effectively forcing taxpayers across the country to pay for increasingly costly choices by people and businesses.The findings were contained in a chapter of the annual Economic Report of the President, which was released on Monday afternoon and this year focused on long-run challenges to the U.S. economy. They came on a day when the Intergovernmental Panel on Climate Change, a body of experts convened by the United Nations, reported that Earth was barreling quickly toward a level of warming that would make it significantly more difficult for humans to manage drought, heat waves and other climate-related disasters.The White House report details evidence showing the United States is more vulnerable to the costs of extreme weather events than previously thought, while suggesting a series of policy shifts to ensure the poorest Americans do not foot the bill.“Climate change is here,” Cecilia Rouse, the departing chair of the Council of Economic Advisers, said in an interview. “And as we move forward, we’re going to have to be adapting to it and ensuring that we minimize the cost to families and businesses and others.”The report broadly suggests that climate change has upended the concept of risk in all corners of the American economy, distorting markets in ways that companies, people and policymakers have not fully kept up with. It also suggests that the federal government will be left with significantly higher costs in the future if it does not better identify those risks and correct those market distortions — like paying more to provide health care for victims of heat stroke or to rebuild coastal homes flooded in hurricanes.State and local officials, not the federal government, have authority where development happens, so people keep building in high-risk areas, a classic example of what economists call a moral hazard.Johnny Milano for The New York TimesFor example, the report cites evidence that private mortgage lenders are already offloading loans with a high exposure of climate risk to federally backed Fannie Mae and Freddie Mac. It highlights how the federal flood insurance program, which essentially underwrites all home flooding insurance policies in the country, is at risk of insolvency.At a time when administration officials and the Federal Reserve are struggling to stabilize the nation’s financial system, the report warns that home buyers and corporate investors appear to be underestimating climate-related risks in their markets, which could lead to a financial crisis.“Rapid changes in asset prices or reassessments of the risks in response to a shifting climate could produce volatility and cascading instability in financial markets if not anticipated by regulators,” the report says..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.To address those dangers, the report offers components for a federal climate adaptation strategy. Its recommendations — some of them already in early stages through existing administration actions — include producing better information about climate risk, helping financial markets accurately price that risk and better protecting the most vulnerable from the effects of climate change.Perhaps the most significant proposal, and probably the most politically sensitive, is a call for Washington to exert more pressure on state and local officials, pushing them to be careful about where and how they let people build homes, businesses and infrastructure projects.That proposal would address a core problem that has hindered America’s efforts to adapt to climate change. When people build in places that are most exposed to the effects of climate change — along coastlines, near riverbanks, at the edge of forests prone to wildfires — state and local governments get most of the benefits, in the form of higher tax revenues and economic growth. But when flooding, fires or other major disasters happen, the federal government typically pays the bulk of the cost for responding and rebuilding.Yet for the most part, state and local officials, not the federal government, have authority over where and how development happens — so people keep building in high-risk areas, a classic example of what economists, including the authors of the report, call a moral hazard.In response, the document proposes using federal funds to change the behavior of state and local officials, by tying that money to state and local decisions. That approach has been tried before, with little success. In 2016, the Obama administration suggested adjusting the level of disaster aid provided to states, based on what steps they took to reduce their exposure to disasters. States objected, and the change never happened.Subsidizing crop insurance for farmers could continue to encourage Americans to work in areas at high risk of damage from warming temperatures and extreme weather, the Biden administration will warn.Mark Abramson for The New York TimesAdministration officials said they were already trying to leverage some spending from the infrastructure law President Biden signed in 2021 to influence state and local behavior. The report suggests much more aggressive action could be necessary.It also proposes a rethinking of the nation’s system of insuring against disasters — moving away from separate localized policies that cover fire, flooding and other events, and more toward a nationally mandated “multiperil catastrophe insurance” system that is backstopped by the federal government.Perhaps most sobering for Washington’s current fiscal moment — when Mr. Biden is battling with House Republicans who are seeking sharp cuts to federal spending and raising anew concerns over the growing national debt — is the report’s suggestion that climate effects could subject growing numbers of Americans to heat stroke, respiratory illnesses and other ailments in the years to come. That could further drive up government costs for health programs like Medicare and Medicaid.The Council of Economic Advisers has begun a yearslong effort to project those climate-related effects on future federal budgets, which it detailed in a highly technical paper released this month.The report released on Monday also included chapters on the economics of child care, higher education, digital assets and more.In reviewing Mr. Biden’s economic record, White House economists dived deep into the issue that has bedeviled the recovery on his watch: persistently high inflation. The report lists several explanations for why price growth has surprised administration and outside economists over the last two years but never settles on a primary driver. It does concede that pandemic relief spending under Mr. Biden and President Donald J. Trump may have played a role, by helping Americans save more than usual — and then begin to spend that extra savings.“If the drawdown of excess savings, with current income, boosted aggregate demand, it could have contributed to high inflation in 2021 and 2022,” the report says. More