Winter storms threaten economy

The winter storms barreling across much of the United States are undercutting the nation's economy just when signs of stronger growth had begun to emerge.
AP Wire
Feb 17, 2014

Retail sales tumbled in January after a smaller decline in December, the government said Thursday. The news came as another snowstorm blanketed a third of the country, likely ensuring that February will mark a third straight month of weak job growth.

Some economists responded by lowering their overall growth estimates for the January-March quarter. Freezing weather usually slows the economy during winter before growth picks up once temperatures rise again. But the onslaught of snow days this winter could prolong the slowdown.

For one thing, harsh conditions tend to rob many hourly workers of income. The avalanche of nasty weather means that waiters, limousine drivers and store employees might never recoup their lost wages later in the year, said Diane Swonk, chief economist at Mesirow Financial.

Snow days that were declared across the Eastern Seaboard forced many parents to stay home from work. Atlanta closed its schools for a third straight day, Philadelphia for the fifth time this winter.

At the same time, home heating bills have escalated for many such families, many of whom have no choice but to reduce spending elsewhere.

"You disrupted incomes for some people permanently," Swonk said.

She estimates that economic growth during the first three months of this year will be "well below" a 2 percent annual rate — a steep drop from the 3.2 percent rate in the final quarter of 2013.

Several major retailers and restaurant chains have blamed winter storms for chilling sales. McDonald's, the world's biggest burger chain, said bad weather hurt its U.S. sales last month. Whole Foods said weather was one reason its fiscal first-quarter profit and revenue fell below expectations. And Wal-Mart, the world's largest retailer, in late January blamed severe weather for a fourth-quarter drop in revenue.

Based on data from 50,000 retailers, sales plunged 9.6 percent during the height of the polar vortex that gripped much of the nation in January compared with the same period last year, the firm Applied Predictive Technologies said.

For all of January, retail sales fell a seasonally adjusted 0.4 percent, the Commerce Department said Thursday. That marked the second straight decline after a 0.1 percent drop in December.

The retail sales report is the first look at last month's consumer spending, which accounts for about 70 percent of all economic activity. Many economists had predicted that stronger consumer spending this year would cause growth to accelerate.

But auto sales fell 2.1 percent in January. The industry reported a 3 percent drop compared with a year ago, the first year-over-year drop since August of 2010.

February isn't looking much better.

Some dealers lost power or had no customers for two or three days this month. The salt supplier for the auto mall AutoServ in Tilton, N.H., said this week's shipment would be the last because of a shortage, said AutoServ CEO Dennis Gaudet.

Last month, consumers spent less on clothing and furniture. Department store sales extended a decline after a weak holiday shopping season. Even online shopping — the fastest source of retail spending growth year-over-year — fell 0.6 percent last month.

When Americans did buy more, much of the increase was at gas stations, and that was because of rising prices. Their purchases of building materials and groceries also rose.

"These gains may also have been driven by weather," said Peter D'Antonio, head of U.S. economic forecasting at Citigroup. "People evidently bought shovels, snow blowers and salt. And they stocked up on food."

Evidence of a slowdown is a deflating sign after the economy had rounded into January fanned by momentum gathered in the second half of 2013. Economic growth achieved a solid annual rate of 3.2 percent in the October-December quarter after an even better 4.1 percent rate the previous quarter.

The forecasting firm Macroeconomic Advisers responded Thursday to the drop in retail sales by reducing its estimate of growth this quarter to a 1.7 percent annual rate from an earlier forecast of 1.9 percent. Moody's Analytics cut its forecast to a 1.9 percent annual rate from 2.2 percent.

Ryan Sweet, an economist at Moody's Analytics, said weather likely put a "noticeable dent" into growth. He estimated that it shaved up to a full percentage point from first-quarter expansion. He added, though, that the expiration of extended unemployment benefits at the end of 2013 and reduced food stamp benefits also hampered retail sales.

Several other economic reports suggest that growth slowed. Factories received fewer orders in December. Signed contacts to buy homes have plummeted to their lowest level in more than two years.

And the past two monthly job reports were sluggish. Only 113,000 workers were added in January. That's slightly better than the 75,000 jobs for December. But average job creation for the past two months combined has been about half the pace of average monthly job gains over the past two years.

Hiring could remain lackluster in February, too. Thursday's snowstorm overlapped with a government survey that's being used to calculate this month's jobs report.

"It's quite possible that we have to brace ourselves for another soft jobs report," said Jennifer Lee, senior economist at BMO Capital Markets. "That's due to the snow."

There are also signs that the momentum at the end of last year was weaker than initially thought.

Retail sales for December were revised downward in Thursday's report. What was initially a 0.2 percent gain was revised to a 0.1 percent loss. Some economists suggested that growth during the October-December quarter would be slightly downgraded from its initial 3.2 percent annualiz increase.

As a result, the pace of retail sales growth over the past 12 months has slowed. Purchases have risen 2.6 percent compared with January 2013.




One way, many people will win with the snow storms, a chance to make some extra cash to help buy food and pay rent, the some will lose because they will need to stay home a few days, but its winter time, deal with it, In a few months people will be complaining about the how hot it is is.


Like Gord says, it's winter, it's Michigan. Not everything is a crisis and needs intervention or panic. If you simply cannot deal with what is not a lot more than a "normal" winter for the area perhaps you are better suited a bit south. Especially if you are unskilled and cannot afford 4x4's or a newer energy efficient home or apartment then the Mason Dixon is calling. I love winter but I'm ready for this to be over and done with.

Former Grandhavenite

I found this really interesting:
"Based on data from 50,000 retailers, sales plunged 9.6 percent during the height of the polar vortex that gripped much of the nation in January compared with the same period last year, the firm Applied Predictive Technologies said."

It's pretty mind blowing that at the height of the polar vortex over 90% of people and businesses were still spending essentially the same amount of money. In my mind that's the real headline that the economy is extremely, extremely resilient against weather disruptions as opposed to focusing on the 9% or whatever drop in sales.

It's always tempting to underestimate the amount of bounce back from pent up demand there'll be once weather conditions improve. If you wanted to buy a car the weekend of a big snow storm it's not like you'll decide not to buy that car, its sales figures will just be lumped in with the following month instead of the current one. Unfortunately, as always it's the folks further down the income scale getting scr#wed because low-paying service jobs in restaurants etc won't benefit from as much pent up demand. If you usually go to McDonald's but missed a few days from snow, you're not going to make up for it by ordering a dozen Big Macs next time you do go in, your local burger flipper will never recover his or her lost hourly wages. As usual, the people who can least afford it are the ones forced to absorb the pain of any economic troubles.

Barry Soetoro

I'll go to McD's tonight if it helps you out FG.

Former Grandhavenite

You're too kind good sir. It's nice to know that folks are always looking out. Get one of those chicken wrap things though, as they take longer to prepare and I need the overtime.

One insider tip as a token of my gratitude- When you go through the drive through make sure to ask for EXTRA special sauce. As long as you don't look like a cop you'll find a bit of extra greenery in your salad and your soda might be a bit more stimulating than usual if they use the special supply of caffeine reserved for the most savvy customers.

Barry Soetoro

Special sauce? Now yer talkin'!


The only things the winter storms have done here is caused me to put in over 100 hours of volunteer time at the fountain in the past month... During our normally slow times! All this is simply due to staying in the house more often and getting bored, so I work on projects for the fountain. Boy do I wish I could turn that into a job! Lol.

There is one other guy who has put in nearly as much volunteer time as well.

And in case anyone is interested, a lot of new stuff is in the works for next year, half of which will unfortunately probably never see the light of day, but is very interesting nonetheless (like the totally new professionally recorded intro that would have replaced the space oddysey theme that has been played since 1963). There is some stuff that will be seen however, like many new songs, and a couple themed shows (Disney and Jimmy Buffett).

While I may not have been spending a ton of money during the winter storms, I have gotten an entire off-season worth of volunteer work done for the city in less than a month.

Former Grandhavenite

That's gotta be interesting to work with the fountain. The release of the GHMF software was a great move. I haven't used it lately so I'm a bit out of the loop, but I heard there was talk of porting it to the iOS/Android platforms at one point. I've never really gotten into it for lack of time but I love the idea that anyone can design their own musical fountain show now. I remember seeing an article about how there are quite a few people in other countries who've never been to GH doing their own shows. Do you guys ever have copyright issues if people want to use certain songs, or is that generally considered fair use?

It occurred to me that since there's a defined set of instructions or an algorithm for every possible change in pressure, light, angle, etc by each fountain component you could sort of disassemble a show and reconstruct the code by working backwards. If you had the right software you could record a show on an iPad or really any decent camera, and based on the fact that every action is generated in a completely deterministic way by a predictable instruction set you could get essentially the "source code" of a show which I imagine would be extremely useful for folks trying to learn the process of making shows. Have a favorite part of a favorite show? Well now you can see how they did that part and modify it to your liking. If any of the old shows from the early years of the fountain don't have modern code in the new format you could re-generate it if you could find a decent quality video of one of those shows. I'm sure there's tons of other interesting stuff you could do with it that I haven't thought of. I sure wish I had the time to spend on that kind of stuff. Anyway, thanks for putting so much time into it. There's no doubt that GH is a better place because of all the efforts of the fountain team.


There is actually new software currently in development as we speak. I am not going to say much more, but it should be neat. It will include new functions at the fountain.

While I cannot speak officially on the matter, I am told that the city has a license for any music we play.

If you want to see what makes the fountain tick, you can open the .ctl file for any song in a text editor and see the code. It is simply a timestamp on each line with one or more six-digit numbers that tell the controller what function to perform. It gets more complicated with the new lighting (it runs on the DMX 512 protocol, which is mainly used for theatrical and concert lighting).

Thanks for showing your appreciation to those who put their heart and soul into the fountain (it is not just me, there are a couple others who care about it just as passionately). It really does mean a lot to all of us.

Post a Comment

Log in to your account to post comments here and on other stories, galleries and polls. Share your thoughts and reply to comments posted by others. Don't have an account on Create a new account today to get started.