Severe Weather Affects Area Economies

After the weekend blizzard that hit the Appalachians and the Eastern Seaboard with record snow accumulation, MarketResearch.com offered some insight into how such extreme weather can affect the economy.

In its report, MarketResearch.com listed closures and delays, increased retail sales ahead of the storm, big-ticket purchases to prepare and reduce risk and reliance on the media as ways a storm of this magnitude affects the economy.

 

CLOSURES AND DELAYS

 

Extreme rain, snow, fog, and wind can all contribute to airport closures, MarketResearch said.  It is also very common to witness long traffic delays during extreme weather events.

This past weekend, the news media reported more than 8,600 flights were cancelled from Friday through Sunday, and some drivers were stranded along a 35-mile stretch of Interstate 75 for more than 19 hours.  Even Washington, D.C., shut down bus and train service on Saturday and Sunday as a state of emergency was declared.

The report didn’t say so, but stranded travelers make poor food customers.  Stranded passengers will get by or even skip meals because nothing is available.

When those consumers are freed to resume their travels, or when snowed-in households can resume normal shopping, they will not go back and make up for missed meals, food market analysts said.  They will simply pick up where they left off.  The food industry simply misses out on a sales opportunity, and multiplied by millions of consumers, the losses add up.

 

INCREASED RETAIL SALES AHEAD OF THE STORM

 

The extreme weather warnings can arouse fear in consumers, Market Research said.  This can prompt them to rush out and stock their homes with bottled water, nonperishable food, flashlights, batteries and firewood.

Other news reports list beer, wine and pizza as pre-storm favorites along with milk, eggs, bread and toilet paper.  None list steaks or roasts as preferred stock-up items.

Many also fill up their gas tanks ahead of the storm.

However, this type of buying and preparation is only temporary as the storm never lasts as long as the stocked-up supplies.  Roads are cleared within a matter of hours or days, and traffic can resume, even if it is at a slower pace than before the storm.

 

“BIG-TICKET” PURCHASES RISE

 

Many consumers make large purchases before and after the storm.  Stores that sell snow blowers, small plows and snow chains see a lift in sales, MarketResearch said.

News reports also show people buying smaller-ticket items that they normally wouldn’t purchase like snow shovels or small, electric snow throwers.  A television ad this week touted the advantages of the small electric blowers – they didn’t take up much space in the garage.

 

RELIANCE ON THE MEDIA

 

Before, during and after a storm, consumers rely on local media and meteorologists for information to tell them how much preparation is needed.  These television forecasters, in turn, rely on various computerized forecasting systems for their information.

 

CASH CATTLE QUIET

 

Cash cattle markets Tuesday were quiet with packer bids around $130 per cwt on a live basis and asking prices at $137 to $138 live and around $215 on a dressed basis.  There were reports of some dressed sales at $206 to $208 in Nebraska and Iowa but not enough to establish a market.

Cattle trade last week was mostly $133 to $134 per cwt live and $202 dressed.

The USDA reported lower wholesale beef prices again Wednesday, with choice down $1.68 per cwt at $221.33, and select off $1.40 at $215.02.  The choice/select spread narrowed to $6.31 from $6.59 Tuesday, and there were 116 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $158.90 per cwt, up $0.46.  This compares with the Jan settlement Wednesday of $160,92 down $0.17.