Texans are staying inside during record heat — and the state's economy could take a $9.5 billion hit from reduced business

• Americans are staying home to beat the heat this summer.
• In Texas, that could mean a $9.5 billion hit to the state's GDP if the extreme heat continues.
• Americans are also ending up in the emergency room more frequently and paying more to stay cool.

It's too hot to go outside in much of the US — and it's having economic consequences.

As extreme heat grips much of the US this summer and the Earth records its hottest month on record, people are staying inside. And the bars, restaurants, and other businesses they normally patronize are suffering the consequences.

Texas is set to have one of its hottest summers ever. Workers at small and midsize businesses in Texas' tourism, entertainment, and recreation sectors — all dependent on the outdoors — worked 20% fewer hours between mid-June and mid-July this year than they did in the same month between 2019 and 2022, reported Gusto economist Luke Pardue.

Pardue told Insider he was surprised at the magnitude of the decline in hours worked as a result of extreme heat.

"The reduction in economic activity that we're seeing right now is second only to what we've seen during the pandemic in terms of its effect on small business activity," he said.

And this comes after many businesses shifted to offer more outdoor options during the pandemic.

"The summer was supposed to be this great time when everything could be outdoors and then it could kind of be a boon to businesses that are normally indoors," Pardue said. "And then we're seeing, long term, this opposite shift, where during the summer, there's all this extreme heat."

If the heat continues as predicted through the end of next month, Texas' gross state product will take a $9.5 billion hit — equivalent to a 0.47% lower growth rate — economist Ray Perryman told The Wall Street Journal.

Jonathan Horowitz, chief revenue and strategy officer at Buffalo Bayou Brewing in Houston, told the Journal that his taproom's revenue is down about 10% over the same time period last year.

Extended extreme heat is having all kinds of other adverse economic impacts in the state, including on farmers whose animals and crops are being threatened by the temperatures and lack of water.

Nationwide, Americans are also paying more to stay cool. According to the The National Energy Assistance Directors Association, home energy bills are estimated to increase by 11.7% this summer to $578, compared to $517 last summer.

Research suggests workers experiencing heat stress are at higher risk of suffering accidents, which could rack up medical bills and make it more difficult for businesses to maintain a full workforce.

Andreas Flouris, a professor at the University of Thessaly in Greece, told The New York Times that investments to protect workers, such as rearranging shifts or changing uniform colors, pay off since workers can be more productive in the longer run.

Arizona residents, who are facing nearly a month straight of temperatures exceeding 110 degrees, are paying significantly higher electricity bills. It's estimated that an extended power failure from the heat would send nearly 800,000 Phoenix residents to the emergency room. And according to the Nature Conservancy, as of 2021, extreme heat costs Phoenix $7.3 million in hospitalizations and emergency room visits annually, which may rise this year.

Arizona has also seen a 10% drop in workers' weekly hours in the tourism, arts and entertainment, and sports and recreation industries this summer compared to the last four summers, Pardue found.

In New Orleans, many of the city's residents are staying indoors for most of the day to avoid the dangerous heat, which has already reportedly killed residents. A report from March by the Louisiana Department of Health found that each year on average, 320 workers end up in the emergency room for heat-related illnesses. With temperatures well over 100 degrees, this number may increase this summer.

Americans across the country are struggling in this heat wave, and for many, the price to stay cool is becoming unbearable.

Are you staying home or working fewer hours because of extreme heat? Reach out to these reporters at [email protected] and [email protected].