Temperatures are dropping to record-breaking lows across the country thanks to an onslaught of Arctic weather brought on by a polar vortex. While keeping safe and warm is priority number one during extreme weather events like this, there may also be long-term economic effects to worry about.
A report released Monday by Goldman Sachs’ Kris Dawes claims we may see effects of colder weather and recent snowstorms on Friday’s payroll report.
“Regarding the near-term data calendar, we expect that colder-than-normal weather during the survey period for the December jobs report probably pushed employment growth below its recent trend. Our preliminary forecast is for a 175,000 gain in total payrolls to be released this Friday," Dawes writes.
Still, the impact will be small. “We’re talking about rounding errors here, the consensus is close to 200,000 and they’re saying 175,000,” says Yahoo Finance senior columnist Michael Santoli.
Heating prices will also take a pretty penny out of the American consumer’s pocket. “There’s not enough natural gas in storage when you need it and that’s going to be the most direct pocketbook effect,” says Santoli. “Even gasoline prices are starting to creep up and for this time of year they’re higher than they were the year before.”
Natural gas prices have jumped 35% from a year ago and are up 2.7% so far this month.
“We’ve had these mild winters [over the past few years] and have gotten conditioned to this idea that the economic data has come in stronger than expected in the winter…I think one thing we can be sure about is that this pattern is going to be upended because we just got used to it too much,” says Santoli.
Still, retailers have something to look forward to in the cold weather. “There are some data series which are boosted by colder-than-normal weather, including utilities output, and as our retail analysts noted recently, sales of winter apparel,” writes Dawes.
“You have the travel effects and all the rest of it and I do think what you’re going to see is estimates for first quarter GDP coming down a bit,” concludes Santoli.
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