Why the Northeast blizzard won't pack much of an economic punch
The first winter storm that dumped two feet of snow in parts of New England will take about a $500 million bite out of the $17 trillion U.S. economy -- barely a rounding error that can easily be made up, according to research firm Planalytics.
Contrast that with last year when a brutal season in many parts of the country sapped between $15 billion to $50 billion from the economy.
Of course, some businesses such as restaurants will find it challenging to recoup their losses. As Planaltytics Senior Vice President Evan Gold noted, someone who would have gone out to lunch today won't buy two lunches tomorrow. However, people who couldn't go out shopping may make their purchases online. In fact, the timing couldn't have been better.
"You are talking about the slowest retail month," Gold said.
Consumer spending, which discounts seasonal events such as this storm, should pick up in some businesses such as garden supply stores because people buy supplies such as generators when they hear forecasts calling for inclement weather, according to Chris Christopher, the head of consumer economics for IHS Global Insight. They also stock up on staples such as bread, milk and gasoline and place take-out orders from restaurants.
"In general, we see a bump in orders during inclement weather of any kind," said Allie Mack, a spokeswoman for GrubHub, which provides online ordering services for restaurants, in an email. "While we don't have data on hand to point to the specific order spike, it's safe to say that orders jumped as a result of the blizzard in the Northeast on both GrubHub and Seamless."
One industry affected by the storm: airlines. Cancelled flights because of the storm amount to $230 million in lost economic activity, according to the U.S. Travel Association. But carriers could make up much of those losses as flights resume and travelers reschedule their trips.
The International Monetary Fund recently raised its forecast for U.S. Gross Domestic Product growth as cheaper oil and rising consumer confidence shows little signs of ebbing despite slowing in both Europe and Japan.
Even New England, parts of which got walloped by 30 inches of snow, should be fine in the long run economically. The Massachusetts Department of Transportation estimates its snow removal costs at $20 million. According to Ryan Sweet of MoodysEconoomy.com, the region generates $3.6 billion in economic activity every day. The Gross Domestic Product for the Boston area tops $370 billion, the ninth largest region in the U.S.
"It's a non-economic event a even though large parts of New England got creamed," he said in an interview.
Nonetheless, Boston Mayor Martin Walsh has been quoted in the local press as urging residents to stay off the roads because it still dangerous. National Grid, an electric utility serving customers in Massachusetts and Rhode Island, has more than 850 line crews and 380 tree crews on hand to deal with any storm-related issues. Residents on Nantucket Island, however, remain without power. Their power is expected to be restored in the next few hours, according to local media reports.
The blizzard, though, turned out to be a non-event for parts of the Northeast such as Philadelphia and New York, which escaped the brunt of the storm. Gary Szatkowski, who is in charge of the National Weather Service's office in Mt. Holly, New Jersey, took the unusual step of apologizing for what he called a "big forecast miss."