As I write this, it is late at night, and some of the heaviest rain from Hurricane Irene is falling outside. Unlike a summer storm front, a hurricane doesn’t have a clearly defined beginning as it approaches. It was just heavy clouds this morning, then shifting breezes, and by late morning, a few occasional raindrops.
Most of the people I saw out on errands this morning had a deadly serious attitude about them. They were on a mission, and it wasn’t going to take them a minute longer than it had to.
Some economists look at the empty store shelves after people stock up in advance of a severe weather event and say that the disruption appears to spark an increase in economic activity. I’ve seen the supermarket shopping carts loaded with two or three weeks of provisions that someone is buying before a storm, so there must be something to that. Others focus on the many canceled events and closed businesses during the worst of the weather. On a normal Saturday night in August, people would be out entertaining themselves, and instead, right now, they are home, or holed up somewhere, not spending any money at all. For perhaps a million people, the power is out and will stay out for a few days, almost completely negating their ability to spend.
But I think back to the people I saw preparing for the hurricane this morning. They were not out on frivolous errands; rather, they were doing things they felt they needed to do to increase their chances of getting through the storm. This survival mentality has to stick with people at least to a slight extent for longer than the two days of the storm, perhaps not fading away completely for a couple of weeks. You don’t progress that easily from the survival errands of storm preparation to the frivolous spending that forms the margin between a shrinking economy and one that is holding its own.
This survival mentality must have a larger short-term effect on the economy than the thin balance between stocking up and weather-related closings. People in survival mode are more likely to pay debts, hold on to cash, and wait and see what happens before making a decision, just the opposite of the free-wheeling, sky’s-the-limit mentality associated with an expanding economy. It is still a short-term effect that cannot by itself form a long-term trend. But tonight’s hurricane has not been consumers’ only worry this year. There have been so many disruptions, changes, and worries that perhaps collectively they could lead spenders in general to act more hesitantly and make plans with a lower degree of confidence. And perhaps that, combined with other economic obstacles, could lead to a lower level of activity.