Monday, March 2, 2009

When the economy is snowed in

It's now March 2 (even though my watch says it's February 30; gotta reset it!), and I'm avidly following weather reports from the East Coast of the United States, since I'll be flying there tomorrow. But as I write this, schools are closing and airline flights are being cancelled.

A snowstorm can have adverse effects on the economy, unless you sell snowplows or road salt. I haven't found economic damage estimates from this storm, but I did find some from a storm in Britain in early February.

On February 2, beginning estimates on economic damage were beginning to roll in:

London business leaders said the estimated cost to the British capital alone could be as much as 48 million pounds ($69 million) in lost productivity. The country’s Federation of Small Businesses estimated that continuing bad weather on Tuesday could cost the British economy more than one billion pounds.

By February 4, as ill effects continued, one estimate was revised upwards:

With further heavy snow forecast, the Federation of Small Businesses estimated that the economy could lose £3.5 billion in productivity by the end of the week.

Then again, if no one is buying, one could argue that a temporary shutdown in production is a good thing. However, our entire economy is predicated on growth, and if we begin to assume a lack of growth, the implications could be shattering.
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