Winter and Economics

Emmalee Gill

Through the long winter and trying weather conditions this winter, consumers and businesses have taken some hard hits. Not only are people frustrated and tired of the cold weather and snow but companies are struggling too.

NBC News’ article, “Financial Freeze: Winter Woes Cost the Economy $15 Billion” discusses the various areas in which the economy took a hit during these wintery months. Entertainment saw one of the largest effects from the weather as people stopped going out of their way to watch movies or go shopping because getting out and driving in the snow was more of a hazard where the benefit didn’t outweigh the cost of traveling. Restaurants had a disadvantage that other businesses did not; for all the people that did not come to their place, they would never get that money made up. People will not come in a restaurant and order three meals for some they missed a few weeks ago. Another business that was drastically affected by the winter is car dealers. Unfortunately, their sales dropped 2.1% or about $1.7 billion. Over time, this will be made up; however, for the time being, it puts dealers in a tight position. Because cars are an inelastic good but they are also durable and last awhile, this might take some time. Along with entertainment and car companies, industrial production slowed which was due to the large build up of inventory. The economy took a hit with property and crop damage too. There is nothing people can do about this but it caused food prices to increase, the supply to decrease, and the demand to increase for certain items. If those weather conditions were to stay the same, a potential shortage could occur in places like grocery stores or businesses such as Wal-Mart. Hopefully, the economy will bounce back in the second quarter after having a hard time increasing in the first quarter.

Cumulatively, the businesses that will not be able to make up the money will lose about $15 billion. Another issue that the weather this season has created is that in the South, they do not have the materials to clear roads and keep up with drastic weather conditions opposed to in the North where they are much more prepared. Due to the fact that weather has affected the entire nation, airline companies have had to submit to this unfortunate reality. Planes are not able to fly in that weather which caused over 49,000 flights to be cancelled. This however, caused a great benefit for these cancellation cities. Hotels, restaurants, and other businesses were able to pick up many of these consumers as their cancellations led them to extend their stays for on average 18 hours. These flight cancellations became a positive externality to this unfortunate problem.

Overall, everything evens out because although movie theaters and malls are emptier, more people are earning money plowing and keeping up with the weather. Yes, the economy has taken a hit but to make up for it are other businesses that are used more during times like this are benefitting.

Works Cited

"Economy Takes $50 Billion Winter Weather Hit." CNBC. N.p., n.d. Web. 31 Mar. 2014. <http://fm.cnbc.com/applications/cnbc.com/resources/files/2014/02/13/Winter-weather-impact-on-GDP-GDP-weather-impact_chartbuilder.png>.

"Fed confirms weather-related drag on U.S. economy in early 2014." Reuters. Thomson Reuters, 5 Mar. 2014. Web. 1 Apr. 2014. <http://www.reuters.com/article/2014/03/05/us-usa-economy-fed-idUSBREA2427W20140305>.

"Financial Freeze: Winter Woes Cost the Economy $15 Billion." NBC News. N.p., n.d. Web. 31 Mar. 2014. <http://www.nbcnews.com/storyline/deep-freeze/financial-freeze-winter-woes-cost-economy-15-billion-n29781>.

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