Snowmageddon reminds of the economic costs of failed snowfighting
Analyses of the economic devastation of snowfalls that paralyze roadway systems confirm the value of effective snowfighting -- and its cost-effectiveness. HIstorical studies were reinforced with the record snowfalls that hit the DC metro area last week. A Wells Fargo analyst told the Wall Street Journal's Marketwatch :
Some spending increased because of the storms. More money was spent to remove snow, and to repair structures damaged by the ice and snow. Sales of snow shovels and parkas increased. Snow can be a stimulus.
On the other hand, some activity was lost forever. "The losses are real," said Mark Vitner, an economist for Wells Fargo Securities. People who were snowed in won't buy an extra lunch when they get back to work, and they won't park their car twice.
Winter storms are more disruptive than damaging.
"The February numbers are going to be a mess," Vitner said. "It's a downer, but how much of a downer, we don't know." Employment, hours worked, wages and retail sales could decline sharply in February, only to rebound in March, if history is any guide. That movement will mostly reflect the timing of the snapshots of economic activity, and not a fundamental shift in the economy's direction.
And a Deutsche Bank economist added:
Economist Joe LaVorgna of Deutsche Bank figures a snow storm in the survey week lowers payrolls by an average of 90,000 compared with the trend line.
For instance, payrolls fell by a seasonally adjusted 51,000 in March 1993 when the "storm of the century" lashed the Midwest and East during the survey week. Employment was strong before and after the storm. In February before the storm, payrolls had risen by 309,000; in April, payrolls rose by 250,000. The average workweek fell by 0.6% in March.
The 1993 storm also had an impact on seasonally adjusted retail sales, which sank 0.7% in March, only to rise 2.2% in April. Housing starts were also bruised by the 1993 storm, falling more than 10% in March and rising more than 16% in April.
During the blizzard of 1996, payrolls fell by 19,000 in January, and then rebounded by 434,000 in February. Average hours fell by 1.2%, the fourth largest decline on record. The three largest declines in hours worked were also due to severe winter storms.
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