Storms put damper on US economy

Retail sales are down in April, and residential construction is still slow. The agricultural sector could also be affected.

From an economic standpoint, April's weather may go down as the cruelest month.

Forget about April showers. So far, it's been blizzards and nor'easters. And the weather gurus aren't sure the arctic conditions are over yet: Next week may still require scarves, Wellingtons, and mukluks.

For an economy that is counting on the consumer, the timing is not good. Easter was early this year, so shoppers hit the malls in March. Now, retailers will be hard pressed to keep up the momentum, especially when they're scraping ice and snow off their parking lots. The wet and cold weather will also adversely affect residential construction, which was already experiencing a slowing of demand.

But despite the dark and stormy clouds, economists still don't believe it will be enough to drive the economy into a recession.

"For the past century, weather has not been the culprit in driving the economy into a recession," says Richard DeKaser, chief economist at National City Corp. in Cleveland.

Still, after posting strong sales in March, retailers are not optimistic about this month. By contrast, retail sales last April – which was a warm and balmy month – were the strongest of the year. This year, they are running at the weakest level in 22 years, says Bill Kirk, CEO of Weather Trends International in Bethlehem, Pa., which analyzes weather patterns for businesses. "When retailers are not selling goods, there is a trickledown effect," he says. "April will be the catalyst for a broader slowdown across many sectors."

The wet weather may affect impulse spending more than anything else, says Jeff Blodgett, vice president for research at the Connecticut Economic Resource Center in Rocky Hill. But, he says, "If you need a car or a washing machine, you are still going to go out once the weather clears."

A lost month of retail sales may not sink the entire year, says Scott Krugman, a spokesman for the National Retail Federation in Washington. "There are plenty of opportunities to bounce back. Hopefully, April will be a blip on the radar."

From a meteorological standpoint, it will certainly be a sizable blip. So far, it has been the coldest April in 24 years, says Mr. Kirk. "The year-over-year change is as extreme as we have ever seen," he adds.

The extremes were especially noticeable this past weekend, when a major nor'easter engulfed the mid-Atlantic and New England states. In New York's Central Park, 7.5 inches of rain fell – a record for one day in the month of April. With intermittent rain falling Monday, flood warnings were posted in New Jersey, some parts of New York State, and Connecticut.

Along the New Jersey shore, waves driven by gale-force winds caused coastal flooding in places like Sea Bright.

In Massachusetts, officials went ahead with the Boston Marathon despite rain and 30 mile-per-hour head winds. Officials put up more shelters and moved buses into position to pick up runners who dropped out of the race.

The extreme weather could go well beyond retailing and slow running times. The warm weather in March caused fruit trees in Ohio to bloom. But the snow in April has severely damaged the crop. "Apple trees are relatively hardy," says Ken Reeves, senior meteorologist at AccuWeather in State College, Pa. "But I was talking to a central Ohio grower who believes he's lost his entire crop."

Other farm problems could sprout up, too. Last Friday, Planalytics, a weather-impact research firm in Wayne, Pa., issued a report that found soil temperatures are much lower than normal. "Optimistically, we're looking at May 5 before the planting can be completed," says Paul Walsh, a senior vice president and business meteorologist. "This could affect corn prices, which could even impact the price of gasoline since corn is used in making ethanol [now used as a blend in gasoline]."

The short-term outlook is not particularly optimistic. More rain and cool weather could hover over the Northeast through midweek. And some cold weather in Alaska bears watching, says Mr. Reeves. "That might mean another shot of colder air next month," he warns. "There is no guarantee we are heading into springlike weather."

Wire services were used in the report.

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