Saturday, February 27, 2010

Snow and Unemployment

It turns out that unemployment at the end of January and in the first half of February was not really falling after all. Bad weather and power outages had delayed around a million people in filing unemployment claims. It also prevented many people from seeking work, and those who are not out looking for work for a week at a time, even if it is because they are prevented by the weather, are not counted as unemployed.

Two epic northeast winter storms in February were already enough to make the month’s economic statistics look very bad, and a third large-scale storm affecting Northeast cities at the end of the month, even if not as widespread or intense as the two previous storms, can only further depress the economic statistics. The weather will have an effect on most of the indicators that economists look at to determine the direction of the economy. Real estate transactions, for example, will be down, both because of postponed meetings and because houses may look smaller and less impressive when buried in snow. Hours worked per week, retail sales, and hotel occupancy rates will all be adversely affected. But it is not all bad. Foreclosures and bank failures will be slowed down too.