Snow has a chilling effect on commerce
If April showers bring May flowers, what do March snowstorms bring?
Devastating economic losses, according to Berwyn-based Planalytics Inc., a “business weather intelligence” software and consulting firm.
“Regardless of the snow totals, the economy lost one full day of activity and consumer purchasing and still will not be ‘back to normal’ by tomorrow,” said Planalytics’ Senior Marketing Manager Jaclyn M. Lagner in a release Tuesday.
“With less than one week until the official start of spring, consumers impacted by the storm will be stuck in winter for the next several days, continuing to decrease demand for spring apparel,” said Lagner. “Home centers will face much of the negative impact as consumers will not be purchasing lawn and garden products like they were at the same time last year. The impact to restaurants is primarily limited to (Tuesday), but as with most ‘events,’ these are lost sales that will not be recovered.”
Lagner estimated that Nor’easter Stella likely caused apparel stores to take a $310 million hit while restaurants could expect to lose $372 million for the week ending March 18, versus the same period last year.
The largest impact came to home building centers such as Lowe’s or Home Depot, however, with losses totaling $1.2 billion by Planalytics’ numbers.
“A large portion of the economic impact occurred before the storm began,” said Lagner in the release. “Governments, businesses and schools made a decision on Monday to close on Tuesday, thus keeping people at home and halting economic activity.”
Though snow totals were below projections locally, Lagner noted more than 7,000 flights were cancelled and trains were either delayed or canceled. Amtrak’s Northeast Regional service between New York City and Boston was halted and hundreds of thousands on the Eastern Seaboard were
“Even if it’s just for one or two days, the impact is so much more on the eastern seaboard from Boston down to Washington, as opposed to a storm that may occur in Wyoming or Nebraska, where everything is more spread out.” – David Fiorenza, an instructor in economics at Villanova University
left without power, she said.
“And also, everybody runs at a limited schedule – SEPTA, Amtrak – so when you start slowing that down, people aren’t going to work,” said David Fiorenza, an instructor in economics at Villanova University with a specialty in public sector economics.
Fiorenza said that it would be hard to pin down a dollar amount on the storm’s impact because it hit such a large area where much of the country’s commerce takes place.
“Even if it’s just for one or two days, the impact is so much more on the eastern seaboard from Boston down to Washington, as opposed to a storm that may occur in Wyoming or Nebraska, where everything is more spread out,” he said. “We’re more concentrated here and we have such a large hub of the United States up and down the east coast for commerce, finance – for everything, when you come down to it.”
Everything from Atlantic City casinos to small bed and breakfasts would have been impacted, said Fiorenza. Even the National Hockey League, a sport born of frigid climes, cancelled some games Tuesday.
“Sure, they’ll reschedule, but for that particular week, there’s all those people that aren’t going to the arena, there’s all the people who are working part time who depend on that money, there’s all the vendors, who depend on selling all their merchandise or food and beverage,” he said. “I’m so glad the NFL draft isn’t now, because that would have been a disaster out there on the steps of the art museum.”
Some retailers will see sales drop temporarily, as purchases like a new dishwasher or computer might have only been delayed, not lost entirely. But for the restaurant industry, said Lagner, those sales will be gone for good.
“Restaurants feel an impact because restaurants cannot add a day to their week,” said Fiorenza. “They only have seven days in a week, and if they lose one or two days due to snow and they’re already booked during the weekend, it’s hard to make that up.”
He added that hourly employees especially feel the impact, which will become more apparent later on.
“There’s going to be a lag of about a week that you’re going to see,” said Fiorenza. “It’s not showing up right now, but in a week or so, things start to have a domino effect, where revenues maybe aren’t coming in because people didn’t go on Septa, people didn’t go on Amtrak, people didn’t shop at the stores, people didn’t go to work. And if they don’t have any time available to them to take it as a paid vacation day, then they’re going to be without one or two days’ income.”
But Stella could have even wider-ranging damage than just a few short paychecks, according to Oxford Economics, a global macroeconomic and industrial forecasting firm.
Oxford is predicting the storm could have actually nudged an already anemic gross domestic product below one percent for the first quarter. The firm pegs GDP at 1.1 percent now, but estimates Stella will knock that down 0.2 percent.
“It does have some impact on GDP, that’s true, but I’m not sure how much of an effect,” said Fiorenza. “I’d have to wait and see what figures come out from the Bureau of Economic Analysis and see how they track these various events and storms, but I’m not that concerned about it right now. I’d be more concerned if the outages were more widespread, if we had another impending storm coming up this weekend or another one coming later in the month.”
PECO spokeswoman Ben Armstrong did not have exact numbers for the county or region Friday, indicating there were only scattered outages. Delaware County spokeswoman Emily Harris said Tuesday that 2,750 homes were without power at the peak of the storm.
Municipalities will also take a hit, as they typically have to plow their own roads and Tuesday was no different. Chester Councilman William Morgan said the city had about eight to 10 trucks out clearing snow and ice overnight from Monday into Tuesday, during which some employees racked up approximately a full day’s wages in overtime.
Morgan said city officials, firefighters and police gathered to plan out operations ahead of the storm and established a base of operations throughout to ensure there would be enough manpower on hand to deal with any contingencies.
All told, he said the storm probably cost the city about $20,000 in overtime, emergency repairs to trucks, gas and other incidentals. That is a lot of money for a distressed city such as Chester, said Morgan, but it is a far cry from the $200,000 the city had to shell out during a January 2016 storm just for extra trucks from a vendor.
“We learned from last year and this year we definitely cut those costs,” said Morgan. “Because of our situation where we have to be very strict and tight on what we’re spending, that’s partly the reason, but also our guys, as time goes on with the snow, they get a little better each time.”
Morgan said the streets department, fire department and police department worked well together and the city did not have to call a single vendor this year. As far as he knows, no one has complained about the service either.
“Our guys did everything the best they could in a timely fashion,” he said.
Though this is a particularly chilly March – especially in contrast to last year, which contributed to a series of record highs – Fiorenza noted businesses were able to weather December and February rather well, and were bolstered by an unseasonably warm Valentine’s Day. He added that more seasonally appropriate weather is likely on its way and expects that will herald an uptick in commerce.
“People start getting some of their tax refunds in the mail, and then we’ll start seeing some nice activity,” Fiorenza said. “Spring comes around, people start coming out, start going to Home Depot, Lowe’s, things like that, it’ll be good for the area, just good for confidence, I think.”