Sunday, 23 March 2014 18:33

Winter's effect on economy will linger

Written by  Jorge Ribas, Guest Writer, Frederick News-Post
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The winter of 2014, one of the worst in recent memory, has been a season of discontent in our area, from Richmond to Philadelphia.

Ice and snow, winter's progeny, 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?

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 superimposed 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 canceled, 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, Bloomingdale'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 temperatures, 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 U.S. 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 percent of the $15.7-trillion gross national product, or between $52 billion 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 50 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. It is still possible that people may delay buying new cars until the summer despite aggressive marketing in the spring, such as 0 percent 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.

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.

Jorge Ribas is president and CEO of the Mid-Atlantic Hispanic Chamber of Commerce (MAHCC.org).

Read 2495 times Last modified on Sunday, 04 October 2015 20:04

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