It’s been a lovely winter and spring here and across the country. Only an economist could find something wrong with it.
Sure enough, there’s been a swell of analysis recently that much of the positive economic news we’ve seen so far in 2012 is a weather-induced mirage.
The easiest read on this comes from the UCLA Anderson Forecast.
Senior economist David Shulman cites temperatures in most of the country averaging 5 to 6 degrees above normal in January and February 2012 as a key factor in the recent improvement in the labor market, with 227,000 and 284,000 net new payroll jobs created in those months, respectively.
In an essay titled “Curb Your Enthusiasm,” Shulman details how the unseasonably warm winter weather drove the consumer economy.
The impact of the mild winter manifested in several respects, including an unusually low number of workers being kept away from their jobs and lower home-heating bills (aided by plummeting natural gas prices, which helped offset higher gasoline prices) — all of which acted as stimulants for the labor markets.
But, Shulman writes, “We suspect that once the weather and the seasonal adjustment factors normalize in March and April, the economic data won’t look so ebullient.”
Shulman also writes that “the stronger employment data are not appearing to translate into stronger overall GDP growth.” He argues that part of the recent gains in employment was a response to prior growth, not expectations for future growth.
That analysis came out in late March.
Last week, as if on cue, the federal Bureau of Labor Statistics reported disappointing job growth for March.
I’ve been feeling generally upbeat about the economy this year. I still feel like the worst is behind us in Minnesota and the country.
We’ll get a better picture later today when the Federal Reserve releases its Beige Book, an anecdotal report on economic conditions in each of the Fed districts, including Minneapolis.
Here’s hoping for a little sunshine.
— Paul Tosto