“Everybody talks about the weather but nobody does anything about it,” goes the famous quip (written, by the way, by Charles Dudley Warner and quoted by Mark Twain in a lecture). The connection between the weather and the economy is popular among the chattering classes these days. There’s some who think that the winter storms from earlier this month have suppressed business and consumer activity to a degree and so March will bring a stronger bit of growth than we’d otherwise see. In turn, that implies that we shouldn’t get too uptight about data dispatches for this month, as we did yesterday with regards to weekly jobless claims.
Ryan Sweet of Economy.com writes that because “the severe storms that hit the Northeast will have a noticeable effect on February data, most of the lost activity will be made up for in March.”
Bill Cheney, chief economist at John Hancock Financial Services, tells Bloomberg News via BusinessWeek: “Almost certainly we will see bad-looking numbers for February and good-looking numbers for March and we probably won’t be able to tell what the underlying trend is.”
Harm Bandholz, an economist for UniCredit Bank, thinks there’ll be a tailwind for economic reports next month. Why? In a word, snow, as he said last week, according to MarketWatch.com. “The two blizzards that struck the East Coast this week will perceptibly weigh on major economic data releases for the month of February.” If Mother Nature is kind, next month should bring some better trends as March rebounds from the winter of February’s discontent.
But it’s no always clear that severe winter weather deters all economic activity. The Wall Street Journal last week ran a story that advised that retail sales remained strong last month despite frigid temps. Perhaps that’s because it’s always balmy for Joe Sixpack when he’s sitting in his living room and making purchases via the Internet. “Retail sales increased a larger-than-expected 0.5% last month, more than recovering a 0.1% loss of December,” the Journal advised. “The latest retail data suggest real gross domestic product is on a solid track, even though February’s storms cut into business activity.”
Blaming the weather for labor market weakness is hardly a new innovation. As the National Post reported earlier this month:
National Bank chief economist and strategist Stefane Marion points out that when a blizzard shut down the eastern coast of the United States back in January of 1996, roughly 200,000 jobs were reported lost on the month. That’s a significant deviation from the average monthly creation of 150,000 observed prior to the blizzard.
Jobs rebounded very strongly in February with more than 600,000 gained, then reverted to trend the following month.
Mr. Marion also expects to see a loss of roughly 200,000 this time around, with the first sizeable increase in headcounts likely to come in March 2010.
“Those storms will drive initial jobless claims lower next week as workers find the trek into state offices more difficult to make, if they’re open,” Scotia Capital said in a note to clients, noting that affected states comprise about 10% of total jobless claims.
Diane Swonk, chief economist Mesirow Financial, also sees a silver lining after the dark storm clouds of February, explaining earlier this week via AOL’s Daily Finance that “the storms will distort the unemployment data as everyone who works hourly and could not show up for work during the week lost wages, and did not show up on the payroll survey…”
Yes, everyone’s talking about the weather, but deciding what it all means for the numbers will take time. Meantime, meteorological-based hope springs eternal…or at least until March.