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Economics Reporters Over-Discover the Weather

Saturday, 07 April 2012 09:41

Back in February and March when we got reasonably strong employment numbers, some of us noted how unusually good weather likely inflated job growth (see last paragraphs). That is why we were not especially surprised that the March job numbers came in below the average for the prior three months and many economists' expectations.

However, the news stories today were filled with accounts from surprised economists who discovered the influence of the weather on economic data. This stuff really is not rocket science.

In the winter months we usually get some serious snowstorms in the Northeast and Midwest. This means construction sights get shutdown and project starts are delayed. People will be less likely to go out to restaurants when the streets are covered with snow or it's below zero. The same applies to shopping at the mall or buying a new car. If the weather is really bad, factories will shut down because they can't get necessary supplies.

None of this happened this winter which meant that job growth was better in the winter months than would ordinarily be the case. But if we didn't get the winter weakness that we expect, then we won't see the same spring bounce that we usually get.

People were hired in January or February who would not ordinarily be hired until March or April. Similarly, people who bought their car in the winter months will not be buying another one in the spring.

None of this means that the economy is about to sink into recession. It just means that some of the growth from the spring months was pulled forward to the winter months. It's no big deal and there is no excuse for anyone who does this stuff for a living to be surprised.

Comments (3)Add Comment
Yet ...
written by David, April 07, 2012 6:56
the situation provides some political impulse for more stimulus. The Fed could do more, but Washington could push on demand for a few months. Of course, that would help the PotUS, which the Republicans are not likely to do ... which should hurt the GOP if sanity prevails in November.
It does say something about the growth rates of the past few months
written by Bill H, April 08, 2012 1:16
Namely that evaluations of its meaning and impact have been been overly optimistic in terms of actual economic growth. It would also suggest that "seasonal adjustments" have distorted the employment rates.
the trend ...
written by Peter K., April 08, 2012 11:18
... seems to be that the press has manic-depressive mood swings about these jobs report.

Also the Fed and ECB are the ones supporting demand. When they withdraw support, things slip again.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.