Working the Refs
So there was this big snowstorm that hit the East Coast a couple of weeks ago. (Not the one this weekend, that dumped about 2′ of snow on Upstate New York and a little more than a foot here in suburban New Jersey; the one that wiped out D.C. and gave the Party of No an excuse to do nothing.)
Snow in February. What a surprise! Clearly, not something that happens every year.
My high school classmates and others in the Midwest see the notice and say, “Yeah, gosh, sounds like January and February here.”
But This One is Different. Maybe because it gave the U.S. press an excuse to pay no attention to Haiti. Maybe because closing down D.C. meant that all the pundits got to whine and reveal their suffering.
And, just maybe, because it has become the all-purpose excuse for the February Employment Report. Or any other hint that the world is not perfect, and those “green shoots” haven’t been eaten by starving deer who were then shot by Big Bank Hunters.
The Usual Suspects are already out in force.* And the hedging (not in the risk management sense) has begun:
“We will have to wait until March to see if February is an aberration or a fundamental sign that the recovery in sales will be more subdued than hoped,” [Jessica Caldwell, Edmunds’ director of industry analysis said].
So anything that can be marginally interpreted as positive will be The Crest of a Wave, while anything that makes those legendary shoots look as if they were artificial flowers will get the rousing “Wait Until March!” cry.
All we really know is that—thanks to Senator Bunning and a pliant Democratic “leadership”—March, not April, is the Cruelest Month for about 1.2 million normally-working Americans.
But, gosh, the job gains for February might be understated by 5-8% of that total. So let’s not do anything hasty.
*Yes, it’s “pick on Brad DeLong day.” Didn’t you get the memo? (Also, I can’t find discussion of the topic at any of the Other Usual Suspects, though I haven’t checked The Big Picture.)
This issue is so important that you really should round up *twice* the usual number of suspects.
Kind of reminds me of the Movie:
“Mr. Smith ‘Burns’ Washington”
“Great principles don’t get lost once they come to light.
They’re right here; you just have to see them again!”
Seems like the weather, basket ball games, deficits, etc. get in the way of the average joe’s needs. Maybe it is time to start over
So let me see if I have this right. If anybody tries to figure out what the impact of snow on economic data might be, they are big fat liars? But those who know that the economy is in bad shape, without reference to actual events, is a stand-up kind of hack?
Let me see if I have this right. Jessica Caldwell has a record of apple polishing? You know that for a fact? Or is it just that she is unwilling to ignore the very obvious impact of weather on human behavior that leads you to toss her in with the “usual suspects”.
So let me see if I have this right. Angry Bear, having already fallen well below its earlier standards of discourse, is now mostly just a repository for Ken Houghton’s bile, with occassional efforts from other contributors to discuss the economy? ‘Cause the subtext to this post seems to be “anybody who disagrees with Ken Houghton’s not very well articulated view of the economy is prostituting themselves to the man.”
Inches away from “Little Green Footbals” guys. Inches.
I’m mostly with kharris, this sorta rambles and I’m not certain exactly what the takeaway point is.
Not at all; trying to figure out the effect is fair game. But the declarations so far are all running in one direction: the economy is better than the data, so we need to wait. (See Caldwell or http://economix.blogs.nytimes.com/2010/02/26/snowmageddon-still-has-time-to-kill-health-care-reform/“>Catherine Rampell, for example.) Rampell:
“That report will probably be very, very ugly. I have seen some forecasters project job losses as high as 100,000.
The main culprit behind the expected jobs plunge is the blizzard, which closed businesses and kept people from going to work or even seeking work for days and sometimes weeks. These work stoppages probably occurred precisely when the government was collecting data for its February jobs report.”
So the current estimates are all that (1) demand was down and (2) employment was down. (And deliveries were down: http://blogs.wsj.com/economics/2010/03/01/ism-manufacturing-index-shows-impact-of-snow/) “Put it all together, and you can tell a story of heavy snow snarling shipments to and from manufacturers, slowing down production growth.” Not to mention http://blogs.wsj.com/economics/2010/03/01/after-the-tape-new-frugality-not-so-fast/“>savings. “The reasons for the stall are twofold: For one, rebounding wealth since the recession’s depths has helped provide some support for consumer spending. Secondly, weak income growth has left other consumers with little choice but to spend proportionally more of their incomes, particularly in light of still-tight credit conditions.”
So demand, supply, savings, credit, and labor are all down. The first and second are aberrations of snow (and equilibrium), the second and third abide, and the fifth is…?
It is clear that people who are employed did not work in the week. They did not produce, and what they would have produced was not bought, and they have backlogs of orders.
But they have backlogs of orders because they did not have their current workforce. Accept an order to produce, say, 200 units (which takes a month to produce) and lose five to eight business days and you’ll be 50-80 units behind.
But you’re not going to go out and hire a new person to fill the backlog.
Yes, there was an effect on production and sales. But the idea that 100-200K jobs went unfulfilled solely because of weather conditions that were aberrant primarily in the mid-Continent is either (1) rather optimistic or (2) ignoring that the excess snow effect was mostly in the areas that are least underemployed. (See http://economix.blogs.nytimes.com/2010/03/01/underemployment-state-by-state/“>Catherine Rampell again)
So in the best case scenario, the recovery was muted because things were not delivered or sold, though money (savings) was (were) spent. And the only reason firms didn’t hire was the snowstorm that closed D.C. and delayed Philadelphia. (Though there was no snow in NYC and, as noted, nothing unusual about the fallings in the Midwest.)
The worst […]