Sunbird momentum trade could go into reverse
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran
NEW YORK, Aug 22 (Reuters Breakingviews) -Air conditioning set off a multi-decade U.S. mass migration by making it easier to live in warm places – to the benefit of some of the country’s sunnier states. Climate change may curtail that trend.
Migration to counties across the United States was positively correlated to heat and negatively to cold for forty years. That weakening relationship broke down between 2010 and 2020 according to San Francisco Federal Reserve economists. That’s a problem for economies that have benefited strongly from a stream of new arrivals.
Florida, whose population has tripled in 50 years to 23 million, is one example. In 2022, residents in the Sunshine States increased by nearly 2%, thanks mostly to immigration with a grey tint. The largest group of Floridians was aged 60 to 69 according to the U.S. Census Bureau; the second-largest was 50 to 59.
Where such people flow, money does too. Retirees tend to bring savings, while fifty-somethings are in peak earning years. They need homes – construction makes up roughly 25% more of the state’s GDP than the national average – and sustain jobs from waiters to doctors. Retirees also help state and local government budgets, as they pay high real estate taxes, but require little in education spending. It’s one reason the state doesn’t levy income tax – increasing its appeal to migrants.
Arizona too has expanded rapidly, though in a different way, as booming semiconductor manufacturing has lured workers and showered money on real estate and finance. Personal income rose 6.5% last year. Nevada, which offers gambling as well as sunshine, has grown faster still.
All three are at risk from changing climates. Arizona already struggles to meet water demand, and droughts are predicted to increase in severity and duration. The state is now limiting building in Phoenix suburbs that rely too heavily on at-risk groundwater. Las Vegas’s average summer night temperatures have increased some 10 degrees since 1970 according to Climate Central, thanks to buildings and pavement soaking up daytime heat, and increased air moisture trapping it at night.
For Florida, the demographic climate is changing too. The number of Americans turning 65 is peaking at 4.1 million between now and 2027. That augurs a dwindling supply of new retirees from then onwards, and a rising average age of existing ones – which is problematic, it tends to come with a reduction in spending. All of which spells the end of a highly profitable, decades-long trade in sunbirds.
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CONTEXT NEWS
The tendency of U.S. citizens to move from colder to hotter regions has steadily declined according to a working paper, “Snow Belt to Sun Belt Migration: End of an Era?”, from economists at the Federal Reserve Bank of San Francisco.
The paper shows that from 2010 to 2020, both county population growth and county net migration growth rates were essentially uncorrelated with measures of extreme heat days or extreme cold days.
Graphic: US population growth has followed the sun https://reut.rs/3Axdazk
Editing by John Foley and Pranav Kiran
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