Nemo swept across the East Coast this weekend, dropping as much as three feet of snow in some places in the Northeast. Thousands of flights have been cancelled, schools and offices shut down early, and stockpiles of beer and movies purchased.
Last October’s superstorm Sandy was a reminder of the economic consequences of a massive storm; the driving wind and flooding shut down the New York Stock Exchange and kept millions home from work. But usually it’s winter storms that are the culprits of economic disruption. The National Oceanic and Atmospheric Administration’s brochure on winter storms outlines some of the ways blizzards can harm the economy:
“Heavy snow can immobilize a region and paralyze a city, stranding commuters, stopping the flow of supplies, and disrupting emergency and medical services. Accumulations of snow can collapse buildings and knock down trees and power lines. In rural areas, homes and farms may be isolated for days, and unprotected livestock may be lost. In the mountains, heavy snow can lead to avalanches. The cost of snow removal, repairing damages, and loss of business can have large economic impacts on cities and towns,” NOAA said.
Here’s what else we know about blizzards and their impact on the economy:
They cause more work absences than summer storms. Employees are more likely to miss work due to severe weather in the winter than they are in the summer, a Bureau of Labor Statistics analysis of data from 1977 through 2010 found. Why? Winter storm systems tend to be larger and thus affect a bigger swath of the country. Their conditions—snow, freezing rain, ice, and high wind—make transportation difficult. “When such systems hit the major metropolitan areas of the Midwest and the eastern seaboard, for example, they can cause significant disruption to transportation and business activities among a sizable population,” BLS said.
This storm will certainly be no exception. Massachusetts Gov. Deval Patrick ordered cars off the road, and the Associated Press reports that more than 4,000 flights have been cancelled. New York Mayor Michael Bloomberg advised his constituents to leave work early to avoid the worst of the snowfall; The Wall Street Journal reports on a number of traders who did. The good news is that the worst of the weather is expected over the weekend, when work disruptions will be minimal.
Don’t look for it in the jobs data—well, not in the headlines. Although the storm will strike during the period the government is collecting data for its monthly jobs report, Nemo is unlikely to have a major impact on what that report says. BLS combines two surveys to create its monthly jobs report. One measures employment during the pay period that includes the 12th of the month; the other uses the calendar week—Sunday through Saturday—that includes the 12th.
The latter won’t be affected by the blizzard, since people who miss work—even for an entire pay period—due to severe weather are still counted as employed. And in order for the former to be affected, employees would have to miss work for the entire pay period, which can be one, two, or four weeks long, depending on the office. Despite the weekend snow dump, the East Coast should be functioning again within a week, according to some estimates. The airline JetBlue, for example, will waive change and cancellation fees and fare differences from Friday through Sunday, but not after. It's unlikely that many will miss an entire pay period.
Average weekly hours, which are also part of the monthly jobs report, however, could take a slight hit as folks leave early or businesses are shut down. But it’s important to remember that as some employees miss work due to the severe weather, others, like cleanup crews, work overtime, balancing out at least some of the impact.
Do look for it in retail numbers. Paul Walsh, the vice president of weather analytics for The Weather Company, noted in a piece on CNBC.com that the economic impact would come in three phases: “pre-storm surge, shut-in during the storms, and post-storm replenishment.” Ultimately, however, the storm is likely to result in a net negative for retail in February as a shopping weekend is missed, he concludes.
Separately, even though storm preparation sent fuel prices to fresh highs, they’re likely to be balanced by a lack of fuel demand over the weekend as people wait out the storm, CNBC reports.
Echoes of Sandy. Hurricane Sandy was the most recent reminder of the economic impact of a major storm. A recent study by broker Aon Benfield estimated that the storm caused $65 billion in economic losses in the U.S., Caribbean, Bahamas, and Canada. At the same time, the latest jobs report revealed that payroll growth in November—right after Hurricane Sandy—was stronger than initially reported, and actually the third-largest monthly gain for the year, with December not far behind. Blizzard Nemo is expected to hit many of the same communities that were impacted by Sandy.
Check the price tag. A huge blizzard that swept New York City on Dec. 26, 2010, was estimated to have cost over $68 million, according to The New York Times. In 1996, the second-biggest snowstorm in New York City's history was called a "billion-dollar blizzard" in reference to its cost for the area. That price, however, was not expected by economists to be significant in the long run.
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