How The Warm Weather Has Been Damaging The Economy

A popular line this year has been: Any improvement in the economy has been a mirage, since it’s all the result of warm weather.

There are a few problems with this line of thinking.

The first is that economic activity is economic activity. A sale is a sale and so on.

But beyond that, the data just doesn’t bear out that the idea that the economy is distorted and enjuiced.

For example, construction employment (one of those areas where you’d expect to see weather-related gains) actually stalled out in February, at least according to the last BLS report.

What’s more, we can point to areas where the warm weather is clearly harming things, such as industrial production/capacity utilization data.

The year over year losses in industrial production at electric and gas utilities is currently worse than during the recession.


Photo: FRED

Meanwhile, as noted by Deutsche Bank’s Joe LaVorgna in a recent comment, various seasonal purchases (such as winter apparel) are down this year.

So while the gains from weather are hard to find, the losses from warm weather are pretty easily identifiable.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

moneygame-us weather