Tags: weather | retail | recession | economy

Weather Not the Cause of Slow Economic Growth; The Problem Is the Economy

By    |   Friday, 14 Feb 2014 06:57 AM

Analysts are blaming the bad weather for everything in recent weeks. Job growth is one example, with analysts claiming the unemployed were unable to look for jobs because of the cold and snow. Now, retail sales came in below expectations and analysts blamed the cold.

If cold weather was actually impacting the job market, we should see a sharp drop in new unemployment claims. Individuals are usually required to visit the unemployment office in person to initiate a claim. For some reason, the cold has not stopped them from doing so.

Retail sales are also not truly affected by the weather in the long run. Some purchases may be deferred, but they will eventually be made. The recent drop in retail sales and the downward revision to December's sales are a sign that consumers are spending less.

The harsh weather is having an impact that is largely being ignored. It is accelerating a trend that is already in place with household discretionary income dropping. More and more of a family's budget is going to unavoidable expenses like utilities (driven up by government mandates), healthcare (also affected by mandates) and food (at least partly affected by government policies that allocate water in California).

While analysts try to blame the weather, the economy is actually slowing. A recession could be triggered by a small shock to the fragile recovery. If a recession is avoided, the outlook is still far from rosy, with slow growth being all that is possible until wages rise or prices of necessary items fall. Neither seems likely in the coming months.

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MichaelCarr
Analysts are blaming the bad weather for everything in recent weeks. Job growth is one example, with analysts claiming the unemployed were unable to look for jobs because of the cold and snow. Now, retail sales came in below expectations and analysts blamed the cold.
weather,retail,recession,economy
263
2014-57-14
Friday, 14 Feb 2014 06:57 AM
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