Fed Beige Book Confirms Weather Stomped on U.S. Economy in Early 2014
“Weather” was referenced 119 times in the Federal Reserve’s beige book report. While that is by no means excessive for a document with a word count running in the tens of thousands, its high usage confirms what many economic reports have already indicated: frigid temperatures caused U.S. manufacturing output to record its biggest decrease in more than 4-1/2 years in January; kept job creation weak in December, January, and likely February; contributed to a slowing in consumer spending over the past two months; and handed residential construction a hit, with January housing starts dropping to their lowest levels in almost three years. Similarly, the Fed’s reported noted that, “As severe winter weather limited [consumer] activity,” retail sales growth weakened since the previous report for most districts; manufacturing sales and production in several Districts were negatively impacted by “severe winter weather”; “severe weather conditions” resulted in softer vehicle sales; residential housing market faltered in several districts because of the “unusually severe winter weather conditions — and the list goes on.
To put the Fed’s use of the word “weather” into perspective, “growth” was mentioned 80 times, “economy” saw seven mentions, and the “Super Bowl” saw four.
Still, despite the frigid temperatures that impeded hiring, kept consumers at home, and disrupted supply chains, eight of the Federal Reserve’s twelve districts reported economic activity was “improved,” although, in most cases, the “increases were characterized as modest to moderate.” Many of these districts saw economic benefits from tourism as ski resorts saw high traffic. Only the New York and Philadelphia Federal Reserve banks recorded a slight decline in economic activity, thanks to the “unusually severe weather” experienced in those regions, while growth in the Chicago district slowed and conditions in Kansas city remained unchanged.