Economy will warm up when weather does
WASHINGTON (AP) – When the weather warms up, so, too, will the U.S. economy.
That, at least, is the prevailing view of economists, who shrugged off a government report Friday that the economy was weaker last quarter than first thought.
Severe winter weather is probably slowing growth again this quarter. But as the chill and snow fade into memory, long-delayed spending by consumers and businesses could invigorate the economy starting in spring.
“Weather is having an impact on a lot of the data,” said Doug Handler, chief economist at IHS Global Insight. “We will likely see a boost from pent-up demand in coming weeks.”
In the view of most analysts, the snowstorms and extreme cold have exerted a harmful but only temporary effect on the economy. That belief helps explain why Federal Reserve Chair Janet Yellen signaled this week that the Fed will likely continue reducing its stimulus for the economy throughout 2014.
The Commerce Department said Friday that the economy grew at a 2.4 percent annual rate last quarter, in part because consumers didn’t spend as much as initially estimated. Initially, Commerce had estimated that the economy expanded at a 3.2 percent rate in the October- December quarter.
One reason the government initially overestimated growth for last quarter was that it didn’t fully take account of how much bad weather would dampen spending on long-lasting goods such as autos.