If you live within Susquehanna’s footprint, you have had a rough winter.
Sub-zero temperatures, ice storms, snow that just won’t quit – we have seen it all. It’s likely that the cost of heating your home has you shaking your head and wondering where to cut your personal budget so you can keep warm.
You are experiencing how weather impacts your personal economy.
Weather has a major impact on our economy at all levels — local, state and national. Locally, weather influences various business decisions, such as when to plant or harvest, when to pour concrete or shingle a roof in construction projects, or in predicting peak demand for electricity or gas for home heating.
Evan Gold is senior vice president of Planalytics. They provide weather-related intelligence to businesses including Wal-Mart and Dunkin Donuts. Gold notes that bad winter weather can affect certain businesses positively and negatively in the economy.
Those that could see positive results:
- Anyone selling goods online. When customers are stuck at home, they turn to the web and order things.
- On demand for cable companies, for those long winter days and evenings spent in front of the TV, looking for something new to watch.
- Restaurants that deliver.
- Businesses that sell need-based products, like bread, milk, ice melt, rock salt, etc. Many of us have encountered empty shelves at the grocery store or home center when a snowstorm is brewing.
Those possibly negatively impacted by bad weather include:
- Mall-based stores.
- Sit down restaurants.
- Entertainment venues -people hesitate to buy a ticket to a concert if an ice storm might keep them at home.
- Movie theaters.
- Auto sales – it’s difficult to look at a car when it’s covered in snow, and you certainly would not want to test drive it.
- Airlines – since January, 49,000 flights were cancelled and 300,000 were delayed, costing the industry two and a half billion dollars in ticket sales alone.
And you may be surprised at some groups for whom the winter weather created opportunities. For instance:
- The unemployed. New York news outlets reported that the unemployed, including the homeless, were earning above-minimum-wage dollars shoveling snow.
- The ice-fishing industry. A good season is determined by the total number of days that lakes are frozen over.
- Ski and snowmobile resorts.
Extreme weather impacts demand of some products. For example, if you are planning a construction project this summer, you may want to buy plywood before the first tropical storm forms over the Atlantic Ocean. People in the path of these storms buy up plywood to ’batten down the hatches,’ creating local shortages. Those shortages are filled by drawing on supplies from the rest of the country, limiting stocks and driving up prices.
Power outages created by extreme weather, summer or winter, can hit personal pocketbooks in a big way. A family may have to check in to a hotel if icy temperatures prevent them from staying in their powerless home. Food spoils and must be repurchased. Businesses may be forced to shut down, with workers possibly losing out on a paycheck.
Did you go out and purchase a generator for your home after a power outage this winter? Or a snowblower after a monster storm? The concept that drove you to do that is called projection bias, meaning people think the future will be a lot like the present. The problem, researchers have found, is that consumers usually end up regretting those impulsive, weather-related purchases. However, sometimes peace of mind is worth the price!
According to a Washington Post article, economists found that weather can have a huge effect on large purchases like vehicles, homes and pools. For example, if the weather is 20 degrees warmer than the seasonal average, sales of convertibles shoot up 8.5 percent. The same comparison can be made about buying pools in the summer or SUVs in the winter. You may not need them in the long run, but at the time, it seems like a great idea.
All in all, this winter’s record cold spell could cost the U.S. economy up to $5 billion, according to Gold. Consumers will likely feel the effects well into spring, as budgets hard hit by high heating costs are adjusted in some other way.
How did the winter weather affect YOUR personal economy? Will your spending for the rest of 2014 be affected?