Expensive Weather? Rough Winter Dampens Economic Recovery
Another harsh winter is having an impact on what we buy and when. It's helping some businesses but hurting others.
Home sales were down almost 5 percent in January. National Association of Realtors Spokesman Adam Desanctis says in the Northeast in particular, weather can impact attendance at open houses.
"If there's 10 inches of snow falling on the ground in a certain day, or temperatures near or below zero, certainly attendance at open houses would be down," he said.
But DeSanctis says they expect to see overall growth when it comes to home sales this year.
"We are expecting sales this year to be about 7 percent higher than a year ago," he said.
According to the National Association of Home Builders, buyer traffic for new homes slowed in February.
What about the rest of the retail economy? Rutgers Economist Joseph Seneca says while shoppers may not be spending money on certain purchases, they are buying more winter clothing, snow shovels and rock salt.
"it's a complex mixture affecting what's bought, the timing of the purchases. Fewer 'let's get ready for spring' and gardening anticipatory of good weather purchases," he said.
Seneca says the weather affects the timing of what is bought, and on especially cold days, there may be people reluctant to just go out of the house.
He says the winter will affect the sales of food, and storm-related items such as salt and shovels. Those sales, he said, will all create sort of a "spike" in purchases that could have a positive impact on some retailers.
According to Seneca, there will be some "permanent" losses in some areas of the economy as well.
"Things like restaurants, entertainment, where there is, you know, a time element. If you or your family go out to dinner one night a week, for example," he said. "And because of the extreme cold you miss this week, it doesn't mean you're going to go out to eat twice next week to make up for it. And that just represents a permanent loss to those vendors."
How important is consumer spending, whether it is anything from a house to a mouse trap?
"Consumer spending, broadly defined, nationally is two-thirds of gross domestic product, and that's probably likely to be the case in New Jersey if not a little bit more because we are a high income, high consumption state," Seneca said. "You have this large impact of a redistribution and a delay and some permanent losses in the retail sector as a result of this severe cold, and the recurring storms."