John Seminara                                                                                               3/13/14

Earth Science                                                                                             Current Event

                

       Financial Freeze: Winter Woes Cost the Economy $15 Billion

     Works Cited:

Schoen, John W. "Financial Freeze: Winter Woes Cost the Economy $15 Billion." NBC News. N.p., n.d. Web. 13 Mar. 2014. <http://www.nbcnews.com/storyline/deep-freeze/financial-freeze-winter-woes-cost-economy-15-billion-n29781>.

            The article that I decided to read was entitled, Financial Freeze: Winter Woes Cost the Economy $15 Billion, and it was written by John W. Schoen, a reliable reporter on the internet who has been reporting and writing articles on finance, economics, and business for over 30 years. His article ultimately explains the significance of winter weather and what kind of implications that it has on the economy and the consumer market. This winter alone about 10-20 winter storms have blasted the U.S proving to take a huge financial toll. Subsequently, these storms have taken more than $15 billion from businesses across the U.S, according to one of the author’s sources. Some examples of where the economy got hit the hardest are evident in lighter retail sales, property and crop damages, and lastly lost productivity at work. Although the $15 billion seems as if it could truly affect the U.S economy even in the long run, economists estimate that sales will pick up once temperatures are restored to their usual standards, allowing the lasting impacts of the winter’s sales to be minimal. Nevertheless the short-term impacts are still prevalent. Car dealerships, for example, have been severely damaged as dangerous weather conditions and blistering snowstorms encouraged potential buyers to advance away from the dealerships. In one month alone during winter, car sales dropped 2.1%, or $1.7 billion. These potential buyers would likely return once the polar vortex had let loose its grip over the U.S. However, it is not common that all buyers would return once the weather lets up. According to Evan Gold, a tracker of the economic impacts of weather for Planalytics, “ You don’t go out and buy three dinners the next time you go out to a restraint.” This quote demonstrates the significance of the loses that the weather has brought upon some businesses; especially consumer related ones such as retail stores and restraints. It is estimated that this winter’s storms have affected over 100 million people, and that 10% of all lost business could possibly be gone for good. In addition, the horrible weather has made it difficult for economic forecasters to assess if retail sales are merely plummeting as a result of the extremely low temperatures or if it is a long-term sign. Transportation in particular has taken an enormous hit, as terrible road conditions and stalling shipments of finished goods or raw materials have impacted thousands of businesses and may have caused them to have a decrease in sales due to a lack of inventory that couldn’t arrive due to weather. Interestingly, this fact in particular is relatable for me since I couldn’t buy a Ps4 for about a month during January due to shipments being halted from bad weather. Nevertheless, it is also interesting to look into flight delays which have been caused as a result of the horrid weather conditions, and that have caused airlines more than $150 million along with passengers spending about $2.5 billion due to the delays or cancellations. U.S airlines cancelled 49,000 flights and delayed another 300,000 in only February. I found this point to also be very interesting since one of my flights was delayed for 12 hours due to a winter storm crossing over the northeast in January. Lastly, even though generally people were negatively affected by the winter storms, there were some winners from the winter that include landscapers earning extra money plowing driveways. It is because of aspects of the economy similar to this that the net long-term economic impact of severe winter weather typically amounts to almost nothing to the U.S economy, because much of the money not spent on some businesses gets pumped back into the economy through others. Additionally, frozen pipes, downed trees, and car incidents led to a significant amount of loses as well. For example, a single storm in February caused about $690 million worth of insured loses and $1.3 billion in economic losses. It is interesting to see how the winter weather even went as far as to impact insurance agencies. Thus, it is pretty clear that the weather and its effects on the economy had many implications on society all throughout the U.S. Many small businesses had significant reductions in sales throughout the winter, and some farms have taken devastating hits from the cold temperatures, that left permanent inflictions on this year’s harvests for many farmers. Everyone from passengers on airlines to people simply trying to go out to purchase dinner has been impacted by the winter weather that ultimately led to economic strains that also impacts millions of people. Therefore, it is clear that the economic strains caused by winter weather are wide-ranging and have the capability of impacting so many people from the west coast all the way towards the east coast and even the south, where they lack the necessary infrastructure to respond quickly to large winter storms, which could have eventually led to prolonged impacts on businesses.

            Aside from the summary of the article and how the weather and the economy have impacted millions of people across the U.S, there are many aspects of the article, which I think that the author could have improved. This is demonstrated by his lack of evidence to support certain statements about the weather impacting transportation by means of trains or buses. It would have been an interesting thing to add if he had noted some of the statistics of what kind of net loses there were for some of these transportation businesses as a consequence of the winter weather besides airline travel. Also, I think that the author should have implemented a segment into his article that talked about how this winter overall compares to past winters and what the economic effects were like in previously harsh winters. Although, I did like that he added a part about one storm in 1993 that had one of the largest impacts recording almost $5 billion in total losses from that one particular storm. I thought that this author was very unbiased and didn’t state his opinion as much as he relied on facts to describe the impacts of winter on the economy. I also was intrigued by his enrollment of other specialists into the article, which proved the article to be more reliable by including multiple sources for his information. Lastly, I also think that the author could have added more information about the impacts of the cold temperatures on propane prices since many people use propane as a source for heating their homes and because the winter has been so harsh the prices have risen significantly, apparently. Yet, this article was most fascinating because I was able to relate to a couple of the ways that weather has impacted people and their potential business with stores, travel, etc… Overall, it was a great article.