How much does that snow storm cost, anyway?
| New York
Snow melts.
But will this month's blizzards, which have helped break snowfall records across the mid-Atlantic, cause the economy to melt as well?
The short answer is: for only as long as it takes for a snowball to turn to water.
Economists consider winter weather events, such as those that hit the mid-Atlantic and the Northeast, transitory events. Eventually, the plows clear the roads and consumers head for their favorite restaurants and shops.
鈥淚n terms of the impact on the nation鈥檚 gross domestic product, it鈥檚 usually pretty small,鈥� says David Wyss, chief economist at Standard & Poor鈥檚 in New York. 鈥淵ou may lose some days at work, but you can make up for it in the weeks ahead.鈥�
But there is also no doubt there is a cost to the economy, and it is likely to be measured in the billions. 鈥淲e will get up in the billions in a snap,鈥� says Scott Bernhardt, chief operating officer at Planalytics, a Wayne, Pa., firm that forecasts weather for businesses, rolling off some of the larger effects of the storms: $100 million a day in , millions of dollars in municipal plowing and overtime expenses, as well as lost sales.
Of course, in a $14.5 trillion economy, a few billion dollars won鈥檛 make that much difference. 鈥淲e will probably see it in some monthly numbers, such as retail sales, or even some weekly numbers, like the new claims for unemployment, since you can鈥檛 apply when the office is closed,鈥� says Mr. Wyss.
And unlike some weather events, such as hurricanes, the economy won鈥檛 get a boost from the recovery process, he points out. After hurricane Katrina, the nation鈥檚 GDP rose in the following quarter, as demand soared for such things as wall board and lumber products. 鈥淭he effect of all that water from a hurricane is longer lasting than snow, and then you also have the rebuilding afterward,鈥� says Wyss.
One of the larger costs that won鈥檛 get made up is the municipal expense for plowing the snow. In New York, for example, it costs the city an estimated $1 million per inch. In the latest snow storm the city got 10 inches.
Washington Mayor Adrian Fenty has already asked the federal government to help with the cost of snow removal in his beleagured city.
鈥淥nce you get south of New York City, you usually don鈥檛 get much snow, so you run out of snow money very quickly,鈥� says Wyss.
That鈥檚 certainly the case in Newark, Delaware, which has had three major snow events this winter.
鈥淲e used up the snow budget in the first storm in December,鈥� says Newark鈥檚 Mayor Vance Funk III. 鈥淲e usually budget based on the average snowfall for the last three years and the total snow in the last three years equaled what we had in December.鈥�
Newark is taking money from other parts of the budget to pay for the additional salt, overtime, and plowing needed to handle the snowfall from the other two storms. 鈥淏ut we鈥檙e not prone to run to the federal government, which has enough of its own problems,鈥� says Mr. Funk.
The heavy snowfall is also taking its toll on the restaurant business. 鈥淲inter temperatures that are colder than normal have the most dampening impact,鈥� says Hudson Riehle, a senior vice president for the National Restaurant Association, which has researched the impact of weather conditions on its industry. 鈥淲e鈥檝e had those, so absolutely there will be an effect.鈥�
Retailers also admit it is unfortunate the storms hit in the buildup to Valentine鈥檚 Day. But as soon as the roads clear, shoppers may rush out and buy something, says Bill Martin, co-founder of ShopperTrak, a Chicago-based consumer research firm.
鈥淥ur experience from the 2007 Valentine鈥檚 Day blizzard in the Northeast shows that shoppers will go out on the 15th to buy gifts for missing the 14th,鈥� writes Mr. Martin in an email.
In addition, shoppers do have the option of buying online, assuming the delivery services can get through the drifts to drop off their purchases. 鈥淲e think online will help the larger stores but probably not the mom and pop shops who could not open their doors,鈥� says Scott Krugman, a spokesman for the National Retail Federation.
The good news, he adds, is the weather forecast for the Valentine鈥檚 Day weekend and President鈥檚 Day is favorable for the eastern third of the country.
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