By: Katie Little, Christine Wang
The country’s tepid economic growth is being dealt a fresh setback in the form of a massive nor’easter pounding the Mid-Atlantic and Northeast on Tuesday.
The accompanying disruptions from the winter storm could slice up to 0.2 percentage points off the country’s first-quarter GDP growth, according to a new Oxford Economics estimate out Monday. Currently, the firm pegs first-quarter GDP growth at a meager 1.1 percent.
As it churns up the East Coast, Stella hit the densely populated Washington-to-Boston corridor and disrupted transportation, work schedules and school although the impact in major cities so far has not been as bad as initially feared. The storm contributed to the cancellations of more than 7,746 flights, disrupted travel for more than 400,000 travelers, according to FlightAware data. Multiple states have declared states of emergency.
Potential hits to GDP growth will depend on how severely business activity is disrupted. Some of the losses, such as a missed lunch at a restaurant, will be permanent, while others, such as buying milk at the grocery store, will merely be pushed forward.
“Importantly though, while some of the activity will be lost permanently, some of the losses will be offset by ex-ante ‘preparation’ sales as well as clean-up activity,” Oxford Economics wrote in the note.
Just in New York City, the comptroller’s office said on Monday that snow removal costs could hit $23.9 million to $35.9 million.
Importantly too, technology will help lessen the blow of potential lost economic activity.
“[S]ince many service sector workers now have the capability of working remotely from home, this should further lessen the ‘observable’ GDP growth impact,” the economists wrote.
Although snowfall in most areas was lighter than expected, weather analytics firm Planalytics said its estimates for business impacts remain little changed.
“Regardless of the snow totals, the economy lost one full day of activity and consumer purchasing still will not be ‘back to normal’ by tomorrow,” Planalytics said in a statement, explaining that much of the impact came before the storm.
“Governments, businesses, and schools made a decision on Monday to close on Tuesday, thus keeping people at home and halting economic activity,” it said.
Planalytics estimates that for the week ending Mar. 18, home centers missed out on $1.2 billion, apparel stores are down $310 million, while restaurants are short $372 million, compared to the same period last year.