Severe Weather Socks The Economy, But Full Impact Is Unclear
Originally published on Tue March 4, 2014 6:31 pm
The economy often absorbs the impact of snowstorms, such as this week's storm, without much trouble, but this winter the weather is doing more damage than usual.
Sal Sambataro, the manager of Il Cortile in Manhattan, says that when the weather is better, people are packed into the family-owned Italian restaurant. On a recent day, though, the temperature is close to 15 degrees and the doorman wears a furry hat. Business is slower than usual.
"Business is off about 50 percent because of the weather," Sambataro says. "People don't want to go out. They don't want to go out in the ice and snow and the storm."
He says it's been tough, as rents keep rising though business has been lower since the recession. It's not just the weather: A look outside Il Cortile's window will show you the impact. Sambataro counts four For Rent signs across the street.
"All that went out of business this year," he says.
If somebody needs a new car or a bigger house, bad weather might keep them home for a while. But they'll eventually buy. With restaurants, it's different.
"If you stay away a week or two, that doesn't mean when the snowstorm is over with that you'll start eating hamburgers at double the pace," says Chris Christopher, an economist with IHS Global Insight.
Restaurants, airlines, hotels and many other businesses are losing sales this winter, Christopher says. The good news is that people do buy things they want or need, they just might do it when it stops snowing.
"Most things, they do recover quite a bit," Christopher says.
Still, a big problem for economists is that much of the data is hard to decipher, such as job gains and figures on overall national economic growth. Perhaps we're blaming too much of that on the weather.
Chris Mayer, who follows housing as an economist at Columbia University, agrees.
"There's no statistical way to figure out, to disentangle two things," he says. "So we've seen existing home sales fall over the last six months."
How much is that the bad weather and how much are other factors, such as rising interest rates that make it more expensive to buy a house? The tight credit and challenges people have getting into the housing market could be biting harder, and there's just no way to know.
For the moment, trying to figure out the direction of the economy is like sailing through the fog; we won't really know what course we're on until we get past all this bad weather.
Some experts say the weather has cost the economy billions of dollars, but it's hard to say exactly how much.
MELISSA BLOCK, HOST:
Most years, the U.S. economy absorbs the impact of winter storms without much trouble. But here we are in March, and from the Midwest to the mid-Atlantic to parts of the South, once again people are digging out from another snowstorm. This year, there've been so many storms and long stretches of freezing temperatures, the weather is costing us more than usual.
Here's NPR's Chris Arnold.
(SOUNDBITE OF BANGING)
CHRIS ARNOLD, BYLINE: The evening is getting off to a slow start at Il Cortile. It's a restaurant in Manhattan. It's cold outside and heading down to 15 degrees. The doorman is wearing a furry hat. Manager Sal Sambataro says when the weather is better they can pack people in here, including some you've probably heard of.
SAL SAMBATARO: It's a family owned Italian restaurant in Little Italy, a great clientele that's been coming here. I have all their pictures here too. Just last week, Bruce Willis was here. Billy Joel.
(SOUNDBITE OF SONG, 'SCENES FROM AN ITALIAN RESTAURANT')
ARNOLD: You know how an Italian restaurant is supposed to work, right? A bottle of wine, sitting with someone you love...
BILLY JOEL: (Singing) Get a table near the street in our old familiar place, you and I, face to face.
ARNOLD: But what happens when outside that table near the window, it's freezing cold and there's a foot of snow clogging the streets?
SAMBATARO: Business is off about 50 percent because of the weather.
ARNOLD: How much?
SAMBATARO: About 50 percent.
ARNOLD: Big 5-0, 50 percent.
SAMBATARO: 50 percent loss of business. People don't want to go out. You know, they don't want to go out in the ice and snow and the storms or predicted storms also. Supermarkets might get busy. New Yorkers, anyway, they panic. They run in there, buy milk, bread and eggs like they'll never be able to get it again.
ARNOLD: And they're not at his restaurant. Sambataro says that's been tough as rents keep going up around here, even though business has been softer since the recession. It's not just the weather, but all you have to do to see the impact of all this is look out the window.
SAMBATARO: And see one, two, three, four of the businesses for rent. All that went out of business this year because, obviously, they can't afford to...
ARNOLD: Yeah, that's like right across the street, there's a giant red for rent sign.
SAMBATARO: Right. Positano, for rent.
ARNOLD: If somebody needs a new car or a bigger house for their family, bad weather might keep them home for a while. But they'll eventually go out and buy it anyway. But with restaurants...
CHRIS CHRISTOPHER: If you stay away a week or two, that doesn't mean when the snowstorm is over with that you'll start eating hamburgers at double the pace.
ARNOLD: That's Chris Christopher. He's an economist with IHS Global Insight. He says that restaurants, airlines, hotels, lots of businesses are losing sales this winter. But he says the good news is that with much of the economy, it's more like the car example. People buy things they want or need and they'll still go out and buy them when it stops snowing.
CHRISTOPHER: Most things, they do recover quite a bit.
ARNOLD: Still, a big problem for economists right now is that a bunch of economic data has been soft; job gains, figures on overall national economic growth and maybe we're blaming too much of that on the weather. Chris Mayer is an economist at Columbia University. He follows housing.
CHRIS MAYER: There's no statistical way to figure out, to disentangle two things so we've seen existing home sales fall over the last, you know, six months.
ARNOLD: But how much of that is, one, the bad weather or, two, a bunch of other factors, like rising interest rates that make it more expensive to buy a house? Or Mayer thinks it's still too hard to get a mortgage.
MAYER: The tight credit and the challenges that people have getting into the housing market could be, you know, biting harder, and there's just no way of knowing.
ARNOLD: So for the moment, trying to figure out the direction of the economy is like sailing through the fog and we just don't really know what course we're on until we get past all this bad weather. In the meantime, some economists say that the weather has cost the economy billions of dollars, it's hard to say exactly how much, and one major insurance company says that businesses have filed six times as many claims for weather-related losses as we would see in a normal year.
Chris Arnold, NPR News, New York. Transcript provided by NPR, Copyright NPR.