The Sensitivity of United States Economic Sectors to Weather Variability

It has been widely claimed in the meteorology literature that 1/3 of the US economy is weather sensitive. There appears to be little, if any, justification or empirical basis for this claim although the issue is of critical importance to the weather enterprise. This paper defines and examines the sensitivity and vulnerability of state-level economic sector productivity to weather impacts. 27 years of state level super-sector economic data and population-weighted historical weather observations are used to form a panel combining weather information with economic data. A translog production function is used to estimate sectoral sensitivity and vulnerability to weather impacts such as temperature (heating degree and cooling degree days) and precipitation (total and variation). The eleven “super-sectors” are ranked based on their degree of sensitivity to weather, states more sensitive to weather impacts are identified, and the aggregate dollar amount of variation in U.S. economic activity attributable to weather variability is calculated.