Federal forecasters have declared the start of El Niño, and experts warn the warming Pacific pattern could become exceptionally strong—damaging agriculture, supply chains and growth worldwide, with more than $1.8 trillion in losses projected for the United Sta
When the Pacific Ocean starts to warm the way it does in an El Niño, the fallout rarely stays in the weather map. For global markets and everyday budgets, the changes can arrive quietly at first—then compound for years.
Over recent weeks, NOAA satellite observations have captured ocean conditions that are a precursor to El Niño’s formation. Now. the start of the climate pattern has been officially declared by federal forecasters. and the outlook from experts is stark: signals point to a “very strong” El Niño that could be among the costliest on record.
The scale matters. One 2023 study cited earlier examples showing El Niño’s reach into global income and productivity—$4.1 trillion in global income losses tied to the 1982-83 event and about $5.7 trillion linked to the 1997-98 episode.
“The current forecasts imply this could be the costliest El Niño on record,” said Justin Mankin, a Dartmouth geography associate professor who studies El Niño’s economic impacts.
The warming pattern’s influence spreads farther than the ocean it begins in. “El Niño is a major driver of global weather and climate patterns. ” World Meteorological Organization Secretary-General Celeste Saulo said in a recent statement. “The footprint of an El Niño travels far beyond its origins in the Pacific Ocean. impacting agriculture. energy supplies. trade. water resources. supply chains. and livelihoods across entire regions.”.
For economists and businesses, the crucial detail is that the damage is not limited to immediate disaster headlines. Mankin’s research found that the worst drag can linger—hurting the foundations of growth long after storms and droughts pass.
What El Niño changes. and why it hits economies
El Niño can slow global economic growth and trigger trillions in losses. largely because it disrupts weather patterns that ripple through agriculture. infrastructure. and supply chains. In the years El Niño forms. experts say. it can bring a mix of disasters. including devastating floods. crop-killing droughts. plummeting fish populations and an uptick in tropical diseases worldwide.
The hazards—droughts, floods, heat waves and wildfires—do cause immediate damage. But the compounding costs come from what those events do to “the foundations of growth,” including:
Agricultural losses that carry into later seasons
Interrupted labor
Interrupted schooling and childhood development, which surfaces in the workforce years later
Disruption to commodities markets and the transport sector
Investments that never happen because of the shock
Mankin said that past El Niños show how long these effects can last. “We know that past El Niños, like the 1997-98, cost the economy over $7 trillion by 2003,” he said.
In the current forecast, Mankin said the United States could account for more than $1.8 trillion in losses by 2032—part of what he describes as a global cost that builds over time.
How strong this El Niño becomes will shape the bill
Even with confident forecasts about risk, the final tab depends on how strong the event ultimately turns out to be. Because forecasters can’t yet pin down El Niño’s precise intensity, Mankin said, they don’t know how costly it will be.
He pointed to the strength estimates in the current outlook. “The current forecasts have El Niño strengthening to over 2 degrees C (3.8 degrees F). which is a very strong event if it pans out. ” Mankin said. He also tied the projected severity to the size of today’s global economy. noting that the 1997-98 episode cost more than 1982-83 in absolute terms.
“Both of these factors are why the 1997-98 event cost more than 1982-83 one,” he said. “But while a stronger event raises the odds and probable scale of impact, the true total won’t be known for years because the losses compound over time.”
The relative impact—measured as a percentage of the current global economy—will depend on event strength.
As crops. prices and logistics adjust. the timing gets complicated
For farmers and food buyers. the early warning signs are already tied to rainfall. Kyle Tapley. enterprise sales executive at Vaisala Xweather’s WeatherDesk. said: “El Nino is likely to have a negative impact on crop yields in Southeast Asia and India. where El Nino is typically associated with below-normal rainfall.”.
In Indonesia, the threat is already shifting planting decisions. Indonesian rice farmers are racing to get ahead of the usual planting schedule as they battle the threat of a lengthy dry spell this year.
Malaysia’s economic minister warned that El Niño could cause crop yields to fall by an average of 8% to 10% this year.
But drought isn’t the only concern for food supply chains. Fertilizer shortages are also looming. Saskia van Gendt. chief sustainability officer with Blue Yonder. a supply chain management company. said in an e-mail that “a Super El Niño. combined with the current Middle East conflict and resulting fertilizer shortages. could have a multiplier effect on wheat. rice. and corn. which are already at risk due to reduced fertilizer availability during the planting season.”.
She warned that this could mean “near-term shortages and price increases, along with a prolonged impact,” because wheat, rice and corn are used as animal feed and in processed foods.
Flooding is another risk in some regions. Van Gendt said. “During El Niño. increased rainfall is predicted to increase flooding. which may slow transportation and result in higher transportation costs.” She added that in other areas. El Niño may worsen droughts and restrict waterways. She referenced how, in 2023-2024, El Niño contributed to low water levels that limited passage through the Panama Canal.
Still, the picture is not uniformly grim. Van Gendt said “some agricultural regions (eastern Brazil. Uruguay. Italy. Romania. and the Caspian Sea region) could see improved crop yields due to warmer temperatures and increased rainfall. ” according to her briefing. She also pointed out that historically, soybean crop yields have improved during El Niño events.
The financial hit may lag behind the weather
For consumers and companies watching food costs. one warning is that the most visible price impacts can arrive months later. Van Gendt said it “usually takes several months for crop disruptions to translate into higher retail food prices. ” though “consumers may experience earlier cost increases or combined cost increases due to fertilizer shortages.”.
The World Economic Forum has predicted that fertilizer shortages will take six months to a year to affect food supply.
The stakes for the U.S. are also shaped by the pattern’s broader effects
El Niño itself is a natural climate pattern in which seawater in the central and eastern tropical Pacific Ocean is warmer than average. El Niño and its counterpart, La Niña, influence storms and weather patterns around the world, including hurricanes.
On average, El Niños occur about every three to five years and vary in strength, according to the National Oceanic and Atmospheric Administration.
In the United States, El Niños typically result in wetter, warmer winters for the West Coast and a milder hurricane season for the Atlantic seaboard.
Taken together, the forecasted shift in ocean temperatures is translating into a risk that businesses, investors and households may feel in different ways—through commodity prices, transportation slowdowns, and the longer-term drag on growth that experts say can follow these events.
What matters most now is how strong El Niño ultimately becomes. The current projections may be pointing toward a record-breaking level of impact. but the full cost—especially in a world economy that depends on steady food. fuel and logistics—can’t be measured in real time. It will show up, piece by piece, over years.
El Niño NOAA Dartmouth economic losses global income agriculture fertilizer shortages U.S. economy supply chains commodities Panama Canal weather and markets