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February 16, 2015

Brutal Blizzard Attack Could Sap U.S. GDP Again

By Tyler Durden at ZeroHedge 
It was about a year ago today, when economist consensus, ever true to its "momentum extrapolation" ways, predicted that in the first quarter of 2014 US GDP would grow by a solid 2.2% (down from 2.9% predicted several months previously). This happened even as the very economists forecasting the GDP number allegedly had problems getting to and from work, due to all the snow and cold weather. Yes, in the middle of winter: truly unheard of.
The rest was history: a few months later when the final calculation of annualized Q1 GDP was released on June 25, the BEA reported that it had crashed by a whopping 2.9%: a delta of more than 5%!
And since nobody had predicted such an epic collapse in the US economy, an excuse was promptly cobbled together: the weather, and specifically, the "polar vortex" of January and early February, that was raging at the time when those calculating the impact of the weather on GDP only saw it subtracting a few basis points of growth.
The reason we brings this up is because as those who have been following the ridiculous weather in Boston and its surroundings over the past 30 days, when as reported previously the city has seen a record monthly accumulation of snow, and the Northeast in general, the weather this year is as bad if not worse as the "polar vortex" that hobbled the US economy a year ago and cost over $100 billion of lost annualized growth for the quarter.
Actually scrap "as bad" - it is worse. According to Reuters "record-breaking cold gripped the Eastern United States on Monday as an icy winter storm crippled the nation's central states before it was expected to barrel toward the mid-Atlantic in time to snarl Tuesday's morning commute."
Heavy snowfall and ice moving from the Southern Plains eastward pounded Missouri, Arkansas, southern Illinois, Tennessee, Kentucky, Indiana and Ohio, the National Weather Service said. Freezing rain encased Nashville in ice, cancelling flights and closing Interstate 24, according to the Tennessee Department of Transportation.  
Even the home of the king of rock 'n' roll - Elvis Presley's Graceland mansion in Memphis - declared a snow day.  
Sleet in Arkansas shut schools and Governor Asa Hutchinson told nearly all government workers to stay home.  
Cars skidded off roads near Louisville, Kentucky, where there were six times the usual number of accidents and a fleet of more than 1,000 snow plows tried to clear slick roads, officials said.  
"It's been all hands on deck," said Chuck Wolfe, spokesman for the Kentucky Transportation Cabinet.  
Citing nasty weather, Kentucky's state legislature said it would not reconvene until Wednesday at the earliest.  
The storm, which dumped 10 inches (25 cm) of snow on Cincinnati, causing roadway accidents and closing universities, was headed for the nation's capital later on Monday, with up to 12 inches of snow expected, said NWS meteorologist Brian Hurley. "Washington and Baltimore - that's where the bulls eye's going to be," Hurley said.  
About 50 million Americans were under wind chill advisories as the mercury plunged to new depths, breaking records in New York, where it was 5 degrees Fahrenheit (minus 15 Celsius) compared with the previous record for Feb. 16 of 9 F in 2003, and Washington, D.C., where it was 6 F compared with 11 F recorded in 1987, said Hurley.  
The coldest spots in the nation were Watertown, New York, where it was minus 34 F but winds were calm and New Hampshire's Mount Washington, where it was minus 35 F but the winds made it feel chillier, Hurley said.  
"We figure it's probably 85 below with the wind chill - and that's being conservative," Hurley said.
And just so there is no confusion - for the benefit of economists of course, not their far less clueless peers, the weatermen - here is the Weather Channel's latest update:  
Finally, scrap what we said about this only impacting the Northweat: the entire US is being slammed again, just like during the first Polar Vortex of 2014.
So clearly the question is now that Q1 GDP estimates are once again facing the same trajectory as precisely a year ago (and that doesn't even include the real threat of the West Coast port strike spilling over and truly slamming the US economy), how long until the current consensus economic forecast... 
... is slashed by the same 5% that the Polar Vortex of 2014 magically crushed seasonally-adjusted Q1 2014 GDP growth by?
Or perhaps this time will be different, and the laughable cadre of propaganda sycophants known as tenured and/or Wall Street economists finally admits that cold weather in the winter had nothing to do with the economic plunge a year ago, and everything to do with the fact that when it comes to integrity and accuracy of economic data and estimations, the US now ranks pari passu with the Chinese department of truth?
Unless, of course, just like last year economists discover that it was "really cold" post hoc once again, and none other than the Fed decides to blame, drumroll, the weather for crushing its best laid plans (of central planners and men) to hike rates some time in the summer of 2015.
Courtesy Tyler Durden, founder of ZeorHedge (EconMatters author archive here

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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