The Winter of 2014, one of the worst in recent memory, has been a season of discontent in our area, from Richmond to Philadelphia.
The Winter of 2014, one of the worst in recent memory, has been a season of discontent in our area, from Richmond to Philadelphia. Year in and year out, we look forward to the change of seasons and the pleasure it brings when daffodils announce spring's arrival or rotund pumpkins nestled in fields tell farmers that the harvest is nearly over. Even if we are told that an irrepressible Mother Nature will bequeath us a season devoid of moderation, we welcome it. Because, what is Thanksgiving if summer's foliage isn't transformed into a palette of crimson reds and blinding golds and oranges? And what is Christmas and the new year without snow to dress evergreens in bridal gowns and to softly cover a somnolent nature with a blanket of white? For sure, most of us enjoy nature's changing scenery unless it paralyses the rhythms to which our urban existence has become habituated.
The technology that surrounds our offices and homes and the vehicles that carry us in our daily travels have allowed us to create environments vastly different and more comforting than the sometimes hostile outdoors. We don't worry much if a heat wave threatens. Air conditioning at work, home and in our cars allow us to ignore it. Will rain be scarce this summer? No problem, we'll haul out hoses to irrigate our fields, the green turf of our yards, or the flowers that dot our gardens.
On the other hand, ice and snow, winter's progeny, is a different story. They sometimes act like a swarm of misbehaving children too difficult to control. When dispensed in moderation, they create a wonderland. But how can we move about by foot or vehicle when ice covers streets and sidewalks or when snow piles high and government resources for quick removal are limited? What can we do when ice-laden branches fall on transmission lines leaving us in the dark and cold?
Soon daffodils and cherry blossoms, like newborns in a nursery ward, will bring smiles to our faces. But until then, we'll have to endure mother nature's unpredictability, cope with it, and hope for the best. Perhaps, it should be comforting to remember that there have been worse winters in terms of temperature and/or precipitation. But what makes this winter particularly irritating is the intermittent shutdown of public offices, the closing of businesses and schools, and the realization that limited government resources leaves us impotent to hastily resolve the paralysis it causes.
Moreover, a severe winter superimpossed on a struggling economy has the potential to create misery and to delay recovery because of its widespread impact on both normal life and commerce. Over the past three months, tens of thousands of flights have been cancelled, leaving millions of stranded passengers loitering aimlessly or slumbering in airports and shopping malls. Highways have been closed because of blizzard-like conditions or because the still unplowed snow hid the ribbons of asphalt we are supposed to follow. Diverse companies such as Wal-Mart, Macy's, Bloomindale's, Toll Brothers, Home Depot and even McDonald's and Whole Foods Market, have seen a significant decrease in business due to the weather and some have been forced to close stores temporarily until fairer weather returns. Finally, energy consumption skyrockets in summer or winter during record-breaking temperature and consumer spending and productivity due to closed offices and factories declines as well.
Two area economists--Peter Morici of the University of Maryland and Stephen Fuller of George Mason University, as well as Wall Street economists who participated in a recent CNBC survey have all predicted that this winter has the potential to cost the US economy several billion dollars in terms of lost productivity and jobs. Although total amounts differ, the range bandied about is between 0.3% and 0.5% of the $15.7-trillion Gross National Product (GNP), or between $52 and $104 billion. Obviously, the greatest impact will be seen in the first quarter. But all seem to agree that pent-up demand in subsequent quarters for durable goods, such as cars or appliances, and home purchases will make up for the early losses and reduce the total economic impact by perhaps fifty percent. However, while agreeing that pent-up demand will mitigate losses, we believe there are many other variables along the I-95 corridor, from Richmond to Philadelphia, such as decade-old stagnant wages, recent reductions in federal spending, a depressed housing market particularly in Maryland, changing consumer behavior, etc., that taken together should force us to suppress Pollyannaish expectations. Because it is still possible that people may delay buying new cars until the summer despite aggressive marketing in the spring such as 0% interest on loans and rebates. The biggest losers, however, will be airlines, airports, small retail businesses, construction, restaurants, college graduates unable to find paying jobs, and middle-aged adults who lost their jobs and will probably remain unemployed for a long time and then, when hired it may be at lower wages or salaries.
For many of our chamber members the start of the Great Recession happened long before the government announced it--in the early summer of 2006, but it was not reflected in their early reports because economic activity in minority communities has forever remained largely invisible to agencies entrusted with the collection of statistical data. Yet, if properly recorded and analyzed these data can be the equivalent of the canary sentinel in underground mines. The fact is that our government does not track part-time employment very well. Immigrants are known to hold two or three part-time jobs in order to make ends meet. In 2007, we said--and still hold this to be true--that when factors such as the permanent loss of most U.S. manufacturing to foreign countries (by our own doing), intense and perhaps irreversible global competition even in high-tech areas, the unsustainable growth of the American government at all levels, the prosecution of costly foreign wars of questionable national interest, and the pervasive impact of information technology on the way we work, live and play, it will take at least ten years for our economy to recover, but doubtful if it will reach pre-recession levels and, unfortunately, with millions of today's unemployed but soon-to-be retirees unable to find jobs and forced to join the legions of citizens already in retirement, many on disability pensions based on real or fictitious claims.
Although very squeaky today, our economic system is not broken yet--"too large to fail," they say; a phrase we have heard time again of late. So, in the best of American traditions, ïf it ain't broken, don't fix it; or even better, don't grease it.
Spring will arrive in less than six weeks: Cherry blossoms rimming the Tidal Basin will put on their annual show. Tourists will again make their pilgrimage to the Land of Freedom--to Williamsburg, Monticello and Mount Vernon in Virginia; to the Nation's Capital; to Annapolis and Baltimore in Maryland, and to Independence Hall and Valley Forge in Pennsylvania. Local families will start planning summer vacations, and baseball teams will return to their hometowns ready for another "play ball" season. And soon this winter of discontent will recede into history to be resurrected, from time to time, by the abracadabra that liberates our imperfect memories: "Do you remember when...?"
But the winter of our economic discontent will linger far past spring as families struggle to recover from winter's economic blows. As the year progresses, let us hope for fairer weather in all things.
Note: A shorter version of this article was published on the Frederick News-Post as a Letter to the Editor (Sunday, Marrch 23, 2013) under the heading "Winter's effect on the economy will linger": http://www.fredericknewspost.com/news/economy_and_business/winter-s-effect-on-economy-will-linger/article_5a12803a-9bc7-5d90-88f8-b0da89b65013.html
References
1. Jim Puzzanghera, Severe winter weather estimated to cost U.S. economy nearly $50 billion, Los Angeles Times, February 14, 2014.
2. Mark Holan, It snowed again. Can the economy plow through it?, Washington Business Journal, March 3, 2014.
3. John W. Schoen, Air travel's $6 billion winter of discontent, CNBC, March 3, 2014.
4. Steven Pearlstein, A lack of resolve — not resources — keeps us snowbound, The Washington Post, March 29, 2014.