Polar Vortex Freezes US Economy
by Jeff Pinkerton
The US economy (as measured by Gross Domestic Product, or GDP) grew by a meager 0.1 percent in the first quarter of 2014, but it is not time for alarm bells just yet. Most economists attribute the poor performance to the extremely harsh winter experienced by much of the country.
It is easy to understand how severe weather can impact an outdoor industry like construction. If you aren’t building, you aren’t growing the economy. But the weather effect goes well beyond the construction industry. Weather can have a big impact on consumer behavior. We are not as likely to dine out, attend a movie or shop when the weather is lousy.
I had the opportunity to attend an economic briefing by Moody’s economists on Tuesday, and they accurately predicted the poor performance data that was released Wednesday. They cited the winter weather, the end of extended unemployment benefits and businesses selling off their high inventories as reasons for the poor economic performance. They are still bullish on the US economy in 2014, pointing to years of pent-up consumer demand and upward pressure on wages as the unemployment rate continues to decline.
So, take this 0.1 percent growth rate with a grain of salt. Most economic signs point to a better (and warmer) remainder of 2014.