What should get credit for the better-than-expected economic data we have seen lately? The majority of economists in a recent survey believe one deserving factor is the warm weather.
According to MarketWatch, in a special question to the Blue Chip Financial Forecasts, 66 percent of those polled responded “yes” to a question asking “has unseasonable warm and dry winter weather in the U.S. led to an overstatement of the economy's underlying strength in recent months.”
The United States is having one of the mildest winters on record. Though people may not readily make the connection, it appears that there is a relationship between weather and economics.
The Associated Press recently reported that the Philadelphia Fed said new home construction started off the year strong partly because of warm weather. The Minneapolis Fed also said construction activity was boosted by warm weather, the AP reported.
Chuck Dod, owner of a landscaping company in Virginia, told National Public Radio that thanks to milder temperatures, his office has been fielding more calls.
That people are able to work on jobs, such as construction and landscaping, during a period where there would generally be limited activity in those sectors, provides a boost to employment figures.
Also, milder weather has led to a shrinking demand for utilities as people don't need as much electricity or fuel to heat their homes and businesses.
With those savings in their pockets and warmer days at their disposal, it seems that people are more likely to go out and shop, dine and engage in other forms of leisure than they normally would at this time of year.
According to MarketWatch, the three month average of retail sales in January was over 6 percent higher than last year.
That goes to show how great the weather impact can be on consumption, Ellen Zentner, senior economist at Nomura Securities, told MarketWatch. It can be pretty powerful, she added.
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