Chicago, IL 3/27/12 (StreetBeat) -- Chicago’s weather has been unprecedented in the last couple of weeks; it hasn’t been seasonally warm around here, it’s been hot, June would be proud. Record high temperatures were at least tied every day from March 14 through March 22; eight out of those nine days actually set a new record. There have been eight days during this month when a temperature of 80 degrees was hit, that’s another record. To put that total into some perspective, Chicago weather has been tracked for the last 142 years and up to now a temperature of 80 degrees in March had been recorded only ten times; now the total is up to eighteen. How rare is an eighty degree reading at this time of year? “Chicago usually only averages about one 80 degree day in April each year,” reports local radio station WBEZ, “According to the National Weather Service, only once in 140 years of weather observations, has April seen as many 80 degree days as Chicagoans have seen this March.” Chicago is not alone. The Chicago Weather Center says Minneapolis is on pace for one of the top three warmest Marches since 1891; South Bend, Indiana is on pace for the warmest March on record and the same can be said for Omaha, Nebraska and a host of other mid-American cities as well; Detroit and St. Louis are also basking in unusual heat, if not setting new all-time highs for the month; and nationwide more than 7,000 heat records have fallen in the last two weeks alone. On March 23, 2011 there was snow cover on 22.5% of the lower 48 states; on that day this year coverage was only 11.1%. While the recent stretch of historic warmth may be the most remarkable weather of this winter season, it is not the only deviation from the norm. From the beginning of the meteorological winter on December 1, 2011 through February 15 the official high in Chicago was at or above 40 degrees forty times, wrote Tom Skilling, Chicago’s best known weatherman, on February 16. “It is rare for a winter season to record THAT many 40-degree or warmer readings by now. The 141 year average of 40s here by Feb. 15 is 21!”
Last winter New York City had about sixty inches of snow; it started before Christmas and persisted. This year the total for the Big Apple is maybe seven inches and it was over even before the crowd in Times Square cheered in the New Year. Last year the winter was brutal around much of the country and just the normal tough slog for the rest of us. But no large swathes experienced the stay-cation conditions that many of us are enjoying this year. The winter of 2011 was the basis of many articles about the effect of bad weather on the economy and at least one scientific study, led by scientists at the National Center for Atmospheric Research, that determined every sector of the economy is sensitive to changes in the weather, too cold, too wet, too windy, too bad.; an annual negative impact of as much as $485 billion. Bad weather, they say, takes an economic toll.
Can it also be said that good weather means good data? New York Fed boss Dudley is among those who think so, “Moreover, the United States has experienced unusually mild weather over the past few months, with the number of heating degree days in January and February about 17 percent below the average of the preceding five years,” he said in a recent speech. “While this reduces the amount that households and businesses must spend for heating, I suspect that it temporarily boosts economic activity overall.”
Better than average weather making for a sunnier bottom line for some businesses seems to be a reasonable assumption. The Gethsemane Garden Center is located on the north side of Chicago, the warm spell in March has had a huge effect on their business, reports WBEZ; an increase of two to three times from their usual pace at this time of year. I imagine restaurants with outdoor seating saw a surge of diners; surprisingly good weather is hard to resist. But I would suggest that there are different effects depending on the timing of the pleasantly deviant weather. The lack of snow cover, in conjunction with temperatures that are not so cold as to encourage hibernation in January and February may create a bigger variation from the economic activity norm than does warm weather in March when the seasonal turn has already arrived in some areas or is close by in others; latitude dependent. Better weather in March, April, or May is not the difference maker between getting out of the house or remaining hunkered down by the fireplace, which is the case earlier in the year. Therefore it could be that seasonal hiring is not going to be overly affected by marginally better weather in the spring time, but it could matter greatly if the mild weather in mid-winter means that mobility is not impeded and construction sites can continue to operate during a time when they would normally be shut down. Location would also seem to be an important factor in determining the positive economic effect from better than normal weather.
For instance, when Chicago records eight times as many days with a temperature in the forties from the beginning of December to mid-February, as was the case this year versus 2011, it is a game changer for the area businesses, but I doubt there is much difference for shops and industries in Tampa, Florida if winter temperatures rise above the usual seventy degrees at that time of year.
In January the seasonally adjusted non-farm payrolls were up 284k from the month before. Three states that had the benefit of relatively outstanding weather; Illinois, Ohio and New York, accounted for 28% of that increase. On the other side of the coin, Florida, a state that makes a habit of good weather, lost 38k jobs in January. Of course the unadjusted data shows a jobs decline for each of these states in January; it always happens that way and let’s remember that the seasonal adjustments are occasionally suspect. So it is notable that the unadjusted jobs decline in January in the three northern states I mentioned above were the smallest for those states in at least a decade and the lowest ever for Ohio for the BLS data series that dates to 1990. The job loss in Florida was however bigger than it was a year ago.
The weather effect is also on display in the weekly jobless claims data. As an example the BLS highlighted on many occasions this winter that on an unadjusted basis states such as New York, New Jersey and Pennsylvania had a significant declines in the number of claims in part because of fewer layoffs in construction. This notation was not confined to the usually frigid north, but it’s not the sort of thing you generally see if there is a foot of snow on the ground and temperatures are below freezing.
The data has been helped by the weather simply because the weather hasn’t hurt wintertime business in the northern states as is usually does. But the weather has not helped out down south this winter, because on a relative basis, it’s just not the hassle it usually is up north. Another case in point is the National Association of Home Builders (NAHB) Housing Market Index; it has risen from 21 in December to 28 in March. Key to the improvement is the gain in the component called Prospective Buyers Traffic in New Homes, but that might be own to the weather. During that period it was up eleven points in the Northeast and up nine points in the Midwest; but in the South the gain was only two. I think you can blame it on the weather.
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