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[San Francisco Fed Research: El Niño May Push Up US Inflation and Boost Employment] ⑴ A new economics newsletter from the San Francisco Federal Reserve points out that a strong El Niño event in the Pacific Ocean could push up US prices and boost employment next year. ⑵ Historically, El Niño has pushed up core service and food prices; the current event is classified as "very strong." ⑶ The inflation risk facing the US largely depends on whether El Niño will turn into La Niña next year, which has the opposite effect. ⑷ Researchers predict that if this transition occurs, further price pressures could add about 1 percentage point to personal consumption expenditure inflation in 2027. ⑸ The authors estimate that the current El Niño may have already made the personal consumption expenditure price level from April to July about 0.3 percentage points higher than usual. ⑹ They expect this initial increase to subside by the end of this year. ⑺ The authors state that early price pressures in the El Niño cycle first impact consumers' wallets, while the impact on the labor market will take longer to materialize. (8) Analysis by the San Francisco Fed found that total non-farm payrolls are typically unaffected in the first year of an El Niño event, but expand significantly in the second year. (9) Unlike inflation forecasts that depend on the occurrence of La Niña, the expectation of a hiring surge and a decline in the unemployment rate in 2027 is based on a pattern that has consistently occurred in past El Niño cycles. (10) The authors' data sample includes only 22 El Niño events since the 1950s, of which only four were "very strong," while the current one is expected to be stronger than any in historical data. (11) The authors write that these results are not predictions, but rather point to a significant risk of rising inflation next year, and note that El Niño adds uncertainty to the overall outlook for the U.S. economy.