by William Skink
Waking up this morning I quickly rejoiced at seeing the blue of sky and not the haze of smoke. If this holds, we will go to the market and spend money. If it doesn’t, we won’t.
Weather definitely has an effect on the economy, but the last few years weather has become one of the go-to scapegoats for economists. Here’s a Reuters article from March of this year:
U.S. retail sales unexpectedly fell in February as harsh weather kept consumers from auto showrooms and shopping malls, tempering the outlook for first-quarter growth and a June interest rate increase by the Federal Reserve.
Even accounting for the snowy and cold weather, which blanketed much of the country in late February, there is little doubt that consumer spending has slowed significantly after robust growth in the fourth quarter. Consumer spending accounts for more than two-thirds of U.S. economic activity.
And here is a New York Times article from 2014:
WASHINGTON — Retail sales unexpectedly fell last month and more Americans filed for jobless benefits last week in the latest signs that the economy started the year on a softer footing as unseasonably cold weather took its toll.
Large parts of the country have been gripped by freezing temperatures and snowstorms, which have been blamed for weak hiring in the last two months. Economists, however, are not worried yet and are looking for a rebound in the second quarter.
“Today’s data unequivocally show that the unusually cold winter weather is weighing on economic activity,” said Harm Bandholz, chief economist at UniCredit Research. “Consumer spending has literally frozen.”
It’s interesting how similar these two articles read. I’m particularly interested in how this seasonal dip in retail sales is described as “unexpected”. Are we to believe that if it wasn’t for winter weather, retail sales would be at the “expected” levels?
There is no weather rationale to explain the market slaughter that happened yesterday. The 3% crash in value is the biggest drop since November, 2011. Instead of blaming winter, economists are pointing to China as the scapegoat.
There simply must be scapegoats for economists because without seasonal weather or foreign economies to blame, they might have to start reflecting on the failure of the entire recovery strategy, post-housing-bubble crash.
Anyway, got to go. Got to get the cabin-fever-crazed kids and despondent canines out while the sky is blue.