Analysis: Why Forest Fires Have Ravaged Northern California

Forest fires have ravaged Northern California, AKA wine country. The fires have wiped out 220,000 acres of land and the destruction can cost around 3-6 billion dollars. The issue, however, is not only in the money to repair but in the money lost due to loss of land and businesses. There are fewer producers of wine so therefore the prices for wine brands will increase due to a lack of supply and cause cost-pull inflation, when prices increase and supply drops so costs, such as wages and raw materials and decreased aggregate supply. Currently, short-run aggregate supply, the total production of goods and services available in an economy at different price levels while some resources to produce are fixed, is shifting to the left as prices rise

supply falls. SRAS also decreases due to the increase of the prices of running a business and a huge supply shock that increase the prices of Fops.
When the SRAS shifts to the left, long-run aggregate supply, the relationship between the price level and output, will also decrease which means a decrease in production and an increase in unemployment. This decrease in LRAS shows a decrease in the economic well-being that will affect the rest of the US when wine prices increase. LRAS shifts to the left in response to SRAS shifting and this creates stagflation as both unemployment and inflation rise. This can also be shown on a Phillips curve and see the entire curve shift to the left.
Unemployment is on the rise due to a decrease in RGDP or real output. People may assume unemployment would increase due to the demand for firefighters but the loss of jobs due to the destruction of workplaces overwhelmed the small amount of firefighters demanded. This change in unemployment is due to cyclical unemployment when workers lose their jobs because of downturns in the business cycle. Business drops and so the cycle is in the lower end as the economy goes into a recession.