Tuesday, February 12, 2013

The Snowstorm Slowdown

Major winter storms can be bad for business. The cold weather and difficult travel don’t make people feel like working or shopping.

Last weekend’s storm left a ridiculous 20 to 40 inches of snow across New England. Where I live, on the edge of the storm in Pennsylvania, we were bracing for five inches of snow. The actual snowfall was about one inch — not much, but there were icy patches on the roads and it was enough to keep many people at home, resulting in a very slow weekend in the shops and restaurants. It is the kind of weekend that helps people adjust to the reduced take-home pay after the expiration of a temporary payroll tax cut, and that also means the spending won’t just pop up next weekend instead.

In areas with power failures, people can’t even shop online. Travel restrictions mean thousands of people have to just sit and wait somewhere for a day or longer. Many people will spend days just shoveling snow. I know because I have been through this myself three times in the last twenty years. A day when you are shoveling snow is a day when you’re not thinking about shopping. Snow shoveling might be important work, but it doesn’t show up in the economic statistics.

This storm, then, cuts into the chances that this quarter could show economic expansion nationally. With millions of austerity-budget layoffs starting to take effect next week, the chances of an aggregate economic expansion for the quarter are not looking particularly strong.