US won’t get chill from deep freeze


Is the deep freeze across much of the US going to give the economy a case of the chills?

An artic blast of cold air has resulted in record low temperatures across the upper US and heavy snowfalls in the Northeast.

Extreme weather can have an economic impact. Long stretches of frigid weather may affect construction, brick-and-mortar retailing and restaurant dining.

 

cold-investing

 

 

Soaring Energy

An unusually cold winter in 2013-2014 cost the US economy about $5 billion in lost economic output, according to research firm Planalytics.

Already, consumers in colder regions are facing soaring natural gas and electricity prices.

 

Energy-prices

 

Balancing Act

That said, the US is home to a big and complex economy that generates $18.5 trillion in output.  

What hurts one sector like construction, helps other sectors like winter clothing and utilities.

The broader economy is expected to grow in the 2.5%-3% rate in 2018.

And the US stock market is white hot in the early trading days of 2018, thanks to robust corporate earnings and the prospect of lower corporate tax rates.

 

 

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Bloomberg: S&P 500 Index

 

Takeaway

So far, the great chill of 2017-2018, though obviously dangerous for drivers and the homeless, isn’t likely to have a big impact on the US economy.

In my opinion, investors shouldn’t worry about the weather other than to figure out ways to stay warm and wait for spring.

 

Photo Credit: cleo via Flickr Creative Commons

 

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Xavier Brenner
Xavier Brenner
Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.