Prepare for a New Source of Inflation – DailyWealth

The Weekend Edition is pulled from the daily Stansberry Digest.

On December 30, 2021, an entire subdivision in Boulder County, Colorado was incinerated…

What we now know as the Marshall Fire ‒ the most destructive wildfire in Colorado history ‒ was the culprit.

At a news conference during the catastrophe, Boulder County Sheriff Joe Pelle estimated that the fire was engulfing “football field lengths of land in seconds”… The Sagamore subdivision of 171 homes in the town of Superior (about 25 miles northwest of Denver) was completely destroyed.

In all, 1,100-plus homes across Boulder County were turned to ash, including 9% of Superior’s housing stock.

Climate Adaptation Center CEO Robert Bunting, a longtime resident of the area, says there were two catalysts. First, the extended drought gripping the western U.S. “has [had] no parallel in the past 500 years”… setting up unusually dry, tinderbox-like conditions.

This created the opportunity for dry, westerly winds known as “chinooks” – the second catalyst – to sweep down off nearby mountains at speeds of 100 miles per hour and rapidly consume the parched landscape…

This was one of 20 weather-related catastrophes in the U.S. last year in which losses exceeded $1 billion. To put that in perspective, consider that since 1980, the annual average has been 7.4 weather-related catastrophes of $1 billion or more in losses…

This means that 2021’s disaster toll was almost three times higher than the long-term average.

So in today’s essay, I explain how a growing number of natural disasters could wreak havoc on the economy, on everyday life, and on your investments…

Last year, the Federal Reserve Bank of Richmond published a working paper titled “Extreme Weather and the Macroeconomy”…

The purpose of the research was to evaluate how extreme weather events like the Marshall Fire play out in the broader U.S. economy.

The authors concluded that extreme weather can indeed cause “persistent damage” to economic growth and disrupt price stability (i.e., cause inflation)… and that these factors can persist for up to 20 months.

Around 1,100 families in Boulder are now temporarily homeless as a result of the Marshall Fire. Unfortunately, persistent COVID-19-related supply-chain issues and new fire-related housing demand is pushing up construction costs… and home prices as well.

Around 40% of the U.S. population live in a county hit by extreme weather… That’s about 130 million Americans.

If weather-related disasters continue to trend above-average, then it’s not inconceivable that there will be years when 50% or more of us live in weather-inflicted areas and will experience the kind of inflation that these disasters bring.

In the wake of Hurricane Ida, …….