Tags: winter | weather | economy | snow

CNBC: Harsh Winter Drains $50 Billon, 76,000 Jobs From Economy

By John Morgan   |   Saturday, 15 Feb 2014 08:25 PM

The severe U.S. weather this winter may be more than a nuisance — it has actually cost the economy about $50 billion and resulted in the loss of 76,000 American jobs, according to a CNBC survey of Wall Street economists and financial professionals.

So far in 2014, the harsh conditions have trimmed about 0.40 of a point off total GDP growth, including lost work hours and lost sales, the survey found, on top of a loss through December of 0.16 percent.

However, the Wall Street pros in the survey also saw a silver lining. They predicted there will be a “snap back” in economic activity next quarter because of pent-up demand in the form of homebuilding, auto purchases and other consumer activity.

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"It seems reasonable to conclude that the weather is impacting growth and equally reasonable to anticipate that it will be offset in Q2,'' said financial adviser Hugh Johnson.

John Lonski at Moody's told CNBC that in addition to bad weather, other headwinds for the economy this year have included "higher bond yields, sluggish employment income and slower-than-expected spending growth in emerging-market countries."

There may a scientific underpinning for some of the assertions of the Wall Street survey respondents.

InvestorPlace cited a new academic paper asserting that the stock market tends to perform better when the sun is out, and it underperforms on days when it’s cloudy.

That’s the conclusion in a paper by Mitra Akhtari of the University of California, Berkeley, entitled “Reassessment of the Weather Effect: Stock Prices and Wall Street Weather.”

According to Akhtari’s paper, since sunshine elevates human mood and overcast skies depresses it, weather may be a factor in an investor’s appetite for risk on any given day.

InvestorPlace said she performed a regression analysis on the relationship between weather conditions in New York City and the daily returns of the market as measured by the Dow Jones Industrials. Her conclusion was that sunshine in New York City, home of Wall Street, and daily market performance were positively correlated from 1948 to 2010.

NBC News reported that the heavy snow and ice in Thursday’s storm alone crippled travel for millions of Americans, with more than 5,800 canceled flights by midmorning making it the worst single travel day this winter.

Since December, 94,400 flights have been canceled this winter, according to masFlight, which is more than double last winter’s rate. NBC News said that translates into about 4.9 million airline passengers whose flights have been canceled this winter, plus 36.4 million affected by flight delays.

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The severe U.S. weather this winter may be more than a nuisance - it has actually cost the economy about $50 billion and resulted in the loss of 76,000 American jobs, according to a CNBC survey of Wall Street economists and financial professionals.
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2014-25-15
 

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