Pasadena Star News
By: Cynthia Kurtz
Posted 2/13/2014
January’s new jobs numbers were disappointing. Just 113,000 of the 175,000 projected jobs actually materialized. That is a letdown, especially after the private sector job growth for 2013 averaged 191,000 new jobs per month. And it was well below what is needed to provide employment for even new entrees into the workforce, let alone reduce unemployment.
Especially hard hit were auto and light-truck sales. Ford, General Motors and Toyota all reported declining January sales with Ford suffering a 14 percent drop. Only Chrysler continued to see growth with January sales up 8 percent.
After a strong fourth quarter in 2013, manufacturing experienced a slowdown as well in fabricated metal, petroleum and coal, and plastic and rubber products.
Retail sales reports for January come out tomorrow, but market watchers are predicting a drop in sales. Why the slowdown? What happened to the enthusiasm we saw as 2014 began?\
There are lots of theories. Quantitative easing, Washington’s continued bickering over the debt ceiling and immigration reform. Even Obamacare.
But the one reason that keeps creeping into many reports is “bad weather.” Really? Granted, we have all been willing at times to make do rather than brave bad weather. Test driving a car in a storm doesn’t sound like a good idea. Still, I wondered if lots of individual decisions to keep feet dry could really add up to an economic slowdown.
I went looking for empirical evidence. I found it in a surprising place - an analytical arm of a property and causality insurance company which studies risk - ISO. Their March 2010 study “How Weather Influences the Economy” by Cecilia Szeand and Paul Walsh concluded there is a very direct and significant relationship between weather and the economy. In fact, they believe as much as 30 percent of the gross domestic product is affected by weather.
But it isn’t as easy as identifying bad weather with slow growth. Location plays a big role as well. Snow in Big Bear, California and snow in Atlanta, Georgia prompt very different consumer responses. Hot weather in the San Gabriel Valley and hot weather in Seattle aren’t the same.
Consumer demand is not the only economic factor influenced by weather. Local weather can affect commodity supplies such as losing a citrus crop or having insufficient water for farming. Weather interrupts supply chains by slowing or shutting down transportation systems. Power outages from severe heat or ice storms can cause production impacts.
Impacts from weather - are they reality or a scape goat? Over the long term it is difficult to say. Some economic activity is permanently lost, but some of the reduced consumer spending will shift to future nicer days. Even storm cleanup and new construction can create jobs and offset previous losses.
But there is little doubt that January 2014’s record-breaking weather did have a negative impact on the pace of the economic recovery. Let’s hope for some precipitation in the west and warmer temperatures in the east to get us back on track.
January’s new jobs numbers were disappointing. Just 113,000 of the 175,000 projected jobs actually materialized. That is a letdown, especially after the private sector job growth for 2013 averaged 191,000 new jobs per month. And it was well below what is needed to provide employment for even new entrees into the workforce, let alone reduce unemployment.
Especially hard hit were auto and light-truck sales. Ford, General Motors and Toyota all reported declining January sales with Ford suffering a 14 percent drop. Only Chrysler continued to see growth with January sales up 8 percent.
After a strong fourth quarter in 2013, manufacturing experienced a slowdown as well in fabricated metal, petroleum and coal, and plastic and rubber products.
Retail sales reports for January come out tomorrow, but market watchers are predicting a drop in sales. Why the slowdown? What happened to the enthusiasm we saw as 2014 began?\
There are lots of theories. Quantitative easing, Washington’s continued bickering over the debt ceiling and immigration reform. Even Obamacare.
But the one reason that keeps creeping into many reports is “bad weather.” Really? Granted, we have all been willing at times to make do rather than brave bad weather. Test driving a car in a storm doesn’t sound like a good idea. Still, I wondered if lots of individual decisions to keep feet dry could really add up to an economic slowdown.
I went looking for empirical evidence. I found it in a surprising place - an analytical arm of a property and causality insurance company which studies risk - ISO. Their March 2010 study “How Weather Influences the Economy” by Cecilia Szeand and Paul Walsh concluded there is a very direct and significant relationship between weather and the economy. In fact, they believe as much as 30 percent of the gross domestic product is affected by weather.
But it isn’t as easy as identifying bad weather with slow growth. Location plays a big role as well. Snow in Big Bear, California and snow in Atlanta, Georgia prompt very different consumer responses. Hot weather in the San Gabriel Valley and hot weather in Seattle aren’t the same.
Consumer demand is not the only economic factor influenced by weather. Local weather can affect commodity supplies such as losing a citrus crop or having insufficient water for farming. Weather interrupts supply chains by slowing or shutting down transportation systems. Power outages from severe heat or ice storms can cause production impacts.
Impacts from weather - are they reality or a scape goat? Over the long term it is difficult to say. Some economic activity is permanently lost, but some of the reduced consumer spending will shift to future nicer days. Even storm cleanup and new construction can create jobs and offset previous losses.
But there is little doubt that January 2014’s record-breaking weather did have a negative impact on the pace of the economic recovery. Let’s hope for some precipitation in the west and warmer temperatures in the east to get us back on track.
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