Human Impact Report: Climate Change-The Anatomy of a Silent Crisis

On May 29 the Global Humanitarian Forum introduced a new report , "Human Impact Report: Climate Change-the Anatomy of a Silent Crisis" (available here in its entirety), highlighting not just the dangers climate change poses in the future, but the damage that is already happening as a result of this already rather advanced process. As the executive summary (which you can read here) notes, the study's findings are that

every year climate change leaves over 300,000 people dead, 325 million people seriously affected, and economic losses of US$125 billion. 4 billion people are vulnerable, and 500 million people are at extreme risk.

Furthermore,

These already alarming figures may prove too conservative. Weather-related disasters alone cause significant economic losses. Over the past five years this toll has gone as high as $230 billion, with several years around a $100 billion and single year around $50 billion. Such disasters have increased in frequency and severity over the past 30 years in part due to climate change. Over and above these cost are impacts on health, water supply and other shocks not taken into account. Some would say that the worst years are not representative and they may not be. But scientists expect that years like these will be repeated more often in the near future.

Additionally, the situation may significantly worsen within a matter of decades.

Within the next 20 years, one in ten of the world’s present population could be directly and seriously affected.
Already today, hundreds of thousands of lives are lost every year due to climate change. This will rise to roughly half a million in 20 years.

This report-not at all unprecedented in its presentation of this data, reports on the subject having long noted effects in the world today-is a reminder that this is not some hypothetical future issue, but very much a problem in the here and now, and not a small or distant one, as the late Michael Crichton (whose reasoning on the issue was identical to that of a tobacco company exec arguing that medical science hasn't "proved" a link between smoking and cancer) and Bjorn Lomborg (that darling of D.C. think tanks) try to make it out to be in their dubious analyses-which, alas, reached a far larger audience than this report is ever likely to. Hoperfully, however, they will prove less influential when we look back at the big picture.

The Incredible, Shrinking GDP

Last week I offered a round-up of the economic news from around the world.

Today the news is buzzing with the latest numbers from the U.S..

This morning's news release from the Bureau of Economic Analysis shows that U.S. GDP fell at a 5.7 percent annualized rate during the first quarter of 2009.

A common refrain in the commentary is that this is not as bad as feared (indeed, the story at the Christian Science Monitor is headlined "U.S. Recession Eased in First Quarter"), since the fourth-quarter 2008 numbers showed a slightly sharper 6.3 percent rate of contraction, and preliminary estimates for Q12009 were in the 6.1 percent range. Additionally, as the coverage in Forbes notes, there is some hope among economists surveyed by Dow Jones newswires that the data will be revised downward further to a 5.5 percent rate of shrinkage.

Of course, the word that the news is slightly less bad than the awful picture earlier predicted leaves the news still awful-indeed, the second-biggest one-quarter drop in GDP in twenty-seven years (the first being in the previous quarter, of course) since the brutal recession of the early 1980s (itself, the deepest since the Great Depression in many ways). Additionally, it marks three consecutive quarters of shrinkage in U.S. GDP, a first since 1975, as the BBC noted in its report.

And it is worth examining the numbers more closely.

In the words of the Washington Post's blunt assessment, the data

continued to show a near-collapse in business investment, with spending on equipment and software falling at a 33.5 percent annual rate, and investment in structures falling at a 42.3 percent rate. Those numbers continue, even after the revision, to support the idea that businesses are aggressively trimming their sales, unwilling to take any risk.

Moreover, "Gross private domestic investment continued to be a major factor in Q1 GDP decline, plummeting 49.3%, the largest decline since 1975" according to Forbes.com. (Incidentally, it is this which has pushed up corporate profits, by about $42.6 billion, though by only a sixth of the $250 billion drop in Q42008. According to the Wall Street Journal, "Year-over-year, profits were down 22 percent.")

Indeed, the BEA release notes "larger decreases in private inventory investment and in nonresidential structures" compared with the previous quarter.

It is also worth noting that one reason that the GDP numbers were "not as bad" as feared is a slight uptick in consumer spending (consumer durables-goods expected to last over three years-playing an important role), and the fact that imports (a subtraction in GDP) fell more rapidly than anticipated. (The unrevised number is 34.1 percent, "the largest decline since 1975.") The export numbers were a little better than anticipated, but at an updated rate of 28.7 percent, still showed their "largest decline since 1971."

Sharply reduced investment, nervous and tight-fisted managers, and the weakening of exports even below their "normal" trade deficit-inducing levels are all particularly bad signs (particularly from an employment standpoint), though plenty of analysts are betting on the leanness of inventories (and on government stimulus, not just in the U.S., but elsewhere, and perhaps China in particular) to produce a better second quarter 2009 (better in the sense of a smaller drop, at a rate of maybe just two percent of GDP per year) and a turnaround in the second half of the year.

If so, then the U.S. would be an exception to the general pattern, given the grim prognosis for Europe (EU officials expecting contraction to continue not just through 2009, but 2010 as well), and the severity of the situation in Japan (where the UN's relatively optimistic World Economic Situation and Prospects 2009 anticipates stagnation "at best" for the coming year).

At the very least, it should not be assumed that things can only get better.