How much does that snow storm cost, anyway?
Effects from a snow storm like the one that blanketed the mid-Atlantic this week can add up to billions of dollars, once lost productivity and sales and emergency road clearing are factored in. But the cost to the overall US economy is likely to be short term.
Snow melts.Skip to next paragraph
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But will this month's blizzards, which have helped break snowfall records across the mid-Atlantic, cause the economy to melt as well?
The short answer is: for only as long as it takes for a snowball to turn to water.
Economists consider winter weather events, such as those that hit the mid-Atlantic and the Northeast, transitory events. Eventually, the plows clear the roads and consumers head for their favorite restaurants and shops.
“In terms of the impact on the nation’s gross domestic product, it’s usually pretty small,” says David Wyss, chief economist at Standard & Poor’s in New York. “You may lose some days at work, but you can make up for it in the weeks ahead.”
But there is also no doubt there is a cost to the economy, and it is likely to be measured in the billions. “We will get up in the billions in a snap,” says Scott Bernhardt, chief operating officer at Planalytics, a Wayne, Pa., firm that forecasts weather for businesses, rolling off some of the larger effects of the storms: $100 million a day in lost government productivity, millions of dollars in municipal plowing and overtime expenses, as well as lost sales.
Of course, in a $14.5 trillion economy, a few billion dollars won’t make that much difference. “We will probably see it in some monthly numbers, such as retail sales, or even some weekly numbers, like the new claims for unemployment, since you can’t apply when the office is closed,” says Mr. Wyss.
And unlike some weather events, such as hurricanes, the economy won’t get a boost from the recovery process, he points out. After hurricane Katrina, the nation’s GDP rose in the following quarter, as demand soared for such things as wall board and lumber products. “The effect of all that water from a hurricane is longer lasting than snow, and then you also have the rebuilding afterward,” says Wyss.
One of the larger costs that won’t get made up is the municipal expense for plowing the snow. In New York, for example, it costs the city an estimated $1 million per inch. In the latest snow storm the city got 10 inches.