In March, Cuba was in the dark for more than a day after fuel shortages caused a nationwide blackout affecting tens of millions. The event came after several other power outages that caught headlines in recent years. How do these nationwide blackouts impact the economy? A new study of a 2025 blackout in Chile finds consumers and businesses may be impacted significantly
“When the power goes out the economy largely shuts down, and it affects a variety of economic activity,” says study co-author Koichiro Ito, a professor at the University of Chicago Harris School of Public Policy. “However, some of the lost economic activity on the blackout day could be shifted to the subsequent days, especially in certain sectors of the economy, and this is why it is important to quantify both of the short-run and long-run effects of nationwide blackouts.”
Ito and his coauthors, Luis Gonzales of the Central Bank of Chile and Mar Reguant of Northwestern University, studied the economic impact of blackouts in Chile in February 2025. Using hourly demand and generation data combined with tax records and retail transaction data, they found that the blackout caused economic transactions to fall by about 35 percent on the day of the outage. About half of this decline recovered over the following four days—indicating that many people and businesses waited to make sales and purchases until after the blackout.
The study found that the blackout resulted in an estimated $70 million in lost economic activity on the day of the outage, or $2,170 for every megawatt hour of lost electricity. It cautions, however, that focusing on just the blackout period doesn’t provide the full economic picture. A truer sense of the impact comes out of accounting for the recovery in subsequent days: Total losses come to $36 million, or $1,118 for every megawatt hour of lost electricity.
“Thirty-six million dollars from just a short time without power is very significant,” says Ito. “This amount of lost revenue underscores that making investments in grid infrastructure to prevent blackouts could save in the long run.”
The study broke down how different sectors of the economy faired. It found that sectors selling durable goods that could be sold later like cars, hardware and agricultural materials were hit hard on the day of the blackout but quickly recovered as consumers waited until after the blackout to make their purchases. For example, car sales dropped by 60 percent on the day of the blackout but rebounded by 52 percent in the following days, leaving a net decline of 8.5 percent.
In contrast, sectors selling time-sensitive or perishable goods like food stores or pharmacies saw smaller initial declines but more persistent losses. For example, supermarket sales fell by 25 percent on the blackout day and recovered by only 9.8 percent in the days after, leaving a net decline of 15.5 percent.
“To build reliable power systems, we need a clear grasp of both the immediate and longer-term impacts of large-scale blackouts,” says Ito. “This is vital information for guiding decisions to make our grid more resilient ahead of an outage, and for restoring power after an outage happens.”