Lower than normal temperatures and an unending barrage of winter storms has made the Winter of 2014 one of the worst in recent memory. But this year’s bad winter weather also has had a negative impact on the nation’s business.
The American Trucking Association’s seasonally-adjusted Truck Tonnage Index was down 4.3% in January, according to an ATA news release. That’s the second largest drop in two years.
Cold Temperatures, Icy Roads
Bob Costello, the group’s chief economist, said the decrease was a direct result of colder than normal temperatures and snowy and icy roads.
“Like most economic indicators, truck tonnage was negatively impacted by bad winter weather in January,” Costello said. “The thing about truck freight is that it’s difficult to catch up. Drivers are governed by hours-of-service regulations and trucks are limited to trailer lengths and total weights. Thus it is nearly impossible to recoup the days lost due to bad storms.”
Costello said the trucking industry was surprised by the severity of this year’s winter storms.
“January wasn’t just one storm, it was several across a large part of the country,” he said. “Therefore, I wouldn’t panic from the largest monthly drop in two years. I’ve heard from many fleets that freight was good in between storms. The fundamentals for truck freight still look good.”
Car Sales Also Down
But it’s not just trucking that has been hit hard by this year’s tough winter. Car sales fell well short of expectations in January, dipping 3%.
Ford Motor Company said fleet sales were down 14% in January becauase bad weather hampered its ability to fill a portion of its fleet orders. And at General Motors, bad weather in the South, Midwest and Northeast cut into sales. Chrysler, however, was the exception to the rule, according to Reid Bigland, the company’s head of US sales.
“The bad weather only seemed to affect our competitors’ stores as we have a great January with sales up 8 percent,” Bigland told CNBC.
Other Economic Indicators Effected
Goldman Sachs economist David Mericle said key economic indicators such as employment, housing and retail sales are all down during the past two months.
In a report on the effects of this year’s bad winter on business, Mericle estimated that sub-normal temperatures and winter storms accounted for more than half of the recent economic slowdown. Gross Domestic Product probably will drop by 0.5% in Q1 2014 as a result.
“We confirm our finding from earlier research that colder weather has a negative and statistically significant impact on most major indicators, and we also find a statistically significant snowstorm effect on some,” Mericle wrote. “We find that weather tends to have the largest effect on housing indicators such as starts and construction; employment indicators such as payrolls, hours worked, and jobless claims; and spending measures such as retail sales. We find a somewhat more modest impact on business surveys, and only a small impact on measures of consumer confidence.”
On a hopeful note, Mericle said the drop the GDP caused by the weather in Q1 should be counterbalanced by a 0.5-0.75% increase in Q2, as the nation shrugs off the cold winter and enjoys a more productive spring.