Posted on 03/08/2014 8:18:38 AM PST by Kaslin
Everyone agrees that the winter just now winding down (hopefully) has been brutal for most Americans. And while it's easy to conclude that the Polar Vortex has been responsible for an excess of school shutdowns and ice related traffic snarls, it's much harder to conclude that the it's responsible for the economic vortex that appears to have swallowed the American economy over the past three months. But this hasn't stopped economists, Fed officials, and media analysts from making this unequivocal assertion. In reality the weather is not what's ailing us. It's just the latest straw being grasped at by those who believe that the phony recovery engineered by the Fed is real and lasting. The April thaw is not far off. Unfortunately the economy is likely to stay frozen for some time to come.
Over the past few weeks, I have seen just about every weak piece of economic news being blamed on the weather. First it was lackluster retail sales that were chalked up to consumers being unable or unwilling to make it to the mall. (This managed to ignore the fact that online sales were similarly week - which would be unexpected for a nation of snowed in consumers). Then came the weak auto sales that were ascribed to similarly holed up potential car buyers. However, this ignores that while GM and Chrysler sales were way down, sales for luxury cars like BMW, Mercedes and Maserati, surged to record high levels (more on that later). No one offered a reason why wealthier motorists were able to brave the cold. A number of other data points, such as lower GDP, productivity, ISM and factory orders were also ascribed to the elements.
Analysts also blamed the weather for weak housing sales and mortgage applications, which both hit multi-year lows. The idea being that hibernating buyers could not get to real estate open houses or to the bank to process loans. This idea ignores the fact that the weakest home sales over the last few months have come from the states west of the Rockies, where temperatures have been above average.
Of course the biggest weakness ascribed to the snow and ice has been the very disappointing employment reports over the last few months. Analysts faced a very difficult task in squaring these reports, which showed fewer than 187,000 new jobs created in December and January combined, with the accepted narrative that the recovery was firmly underway and that the economy was no longer dependent on the Fed's monetary support.
For these desperate economists the weather was a godsend. Mark Zandi had virtually guaranteed that job creation was being deferred by the weather and that hiring would come roaring back once the mercury started rising. The weather has become such a handy and versatile tool for economic apologists that we may expect that financial news stations will start featuring meteorologists more heavily than financial analysts. Move over Jim Cramer, hello Al Roker.
The weather continued to be horrible in February and as a result, there were wide expectations that today's February jobs report would be similarly bleak. But this morning's release of a detailed a slightly better than expected 175,000 new jobs, thereby convincing economists that the economy was so strong that it is overcoming the drag created by the weather. This lays aside the fact that 175,000 jobs should not be causing any optimism. After years of sub-par job growth, I believe a recovering economy would be expected to create more than 300,000 jobs per month in order to make a real dent in underemployment. Those levels, once routine in past decades, seem untouchable today. But weather-related pessimism had caused economist to ratchet down their predictions to just 150,000 jobs in February. Based on that, today's numbers were seen as a win.
But economists are ignoring the likelihood that the weather was never a major factor. Take the cold out of the equation and you would be left with a mediocre February number following two consecutive monthly disasters. This does not change the downward trajectory. In fact, the number may be revised lower in future months, as has been the norm in the years since the economic crisis began.
Drilling deeper into the report will provide little reason for optimism. The labor force participation rate stayed at generational low and the unemployment rate edged up. On the other hand, the long-term unemployed (those out of work for more than 27 weeks) increased by 203,000 to 3.8 million. Furthermore, over half of the jobs created were low-paying or part-time jobs in education, health care, leisure and hospitality, government, and temporary services. Higher paying information jobs declined by another 16,000 following last month's 8,000 loss, and manufacturing added a scant 6,000 jobs.
The report also contained data that shows how older workers are coming out of, or postponing retirement. This trend is likely caused inadequate savings rates, low interest rates, and increases in the cost of living that are rising faster than official CPI numbers. Not only does this point to falling living standards, but the jobs being taken by these older workers would normally be filled by younger, less skilled workers, who are left unemployed, buried beneath a pile of student debt and living in their parent's basements.
In truth, economic activity persists in good weather and bad. Winter is largely predictable. It comes around once a year, basically on schedule. Consumers are used to the patterns and know how to deal them. But don't tell this to today's economists.
A much more plausible explanation to me is that the economy has been weak recently because it is weak fundamentally. The data deterioration corresponds not just to unseasonably low temperatures but also to the diminishment of monthly QE from the Federal Reserve. If you recall the highly anticipated "taper" finally began in mid- December. From my perspective the Quantitative Easing has become the sunshine that drives our phony economy. Diminish that sunshine and the economic winter spreads.
But the sad fact is that QE can push up prices in stocks and real estate, but can do very little to affect positive change in the real economy. That's why I believe that BMW's are selling like hotcakes even as Chevies sit on the lot. Our current policies help the wealthy at the expense of everybody else. Unfortunately, I don't think the economy will improve as long as the QE keeps us locked into a failing model. What's worse, once the weather warms and the economy does not, look for Janet Yellen to first taper the taper, then to reverse the process completely.
So be very wary of the rationalizations that come from economists. I believe they are being used to hide the truth. I just can't wait to see the excuses they come up with once the flowers start blooming in April. They will be doozies.
There’s been maximum overtime at the salt mines and the DOT crews.
Doesn’t that balance out the other stuff?
Obama needs to write an Executive Order banning WEATHER.
Problem solved.
Al Roker is not a meteorologist. Al graduated from State University of New York College at Oswego with a degree in communications.
I don’t believe in polar vortexes.
I do believe in Winter.
I DO believe in Yehovah sending His children a stern message about Who is in real control of this planet’s climate. Hint: it’s not Al Gore. Global warming? ROTFLMAO!
Polar vortex is a legitimate meteorological term.
It’s been used on local weather forecasts here in Indiana for over 20 years that I’m familiar with, by Brian Wilkes, maybe longer.
Now it may well be that progressives are trying to use it to promote their flawed view of climate.
Blame it on the polar vortex. But does the polar vortex exist because because of the cold air .... or does the cold air exist because of the polar vortex?
Still does not answer my question. Perhaps, needs Meteorology 301 instead Meteorology 101.
In northern Vermont, it was called the "Montreal Express."
We need this so-called "bad weather" in northern New England.
It's called "good snowmobiling", "good skiing", "good mushing", "good ice fishing", "good snowshoeing", and perfect logging weather.
When the ground and especially very wet areas are as frozen as they are this winter, the logging is good because you can get your equipment into areas you normally can't get into.
With this much snow, when you skid out your logs, you get a premium when you sell them as they are clean, rather than covered with dirt that must be removed at the mill.
Snowmobiling alone brings over half a billion dollars into New Hampshire, and that was measured in a year of poor snow.
Then there are the ski areas, which have been having a banner year, and all the other winter sports.
I noticed all of the lodging places I pass every night were sold out last night.
A friend of mine is in charge of the ARES, the emergency communication training system in northern NH.
He moved up from the Nazi state of Connecticut a few years ago.
He was amazed that snowstorms that would be considered "emergencies" in Connecticut, were "good snowmobiling" up here.
NO people running around like a chicken with their heads cut off, just a bunch of happy people.
"Happy, Happy, Happy"!
The polar vortex exists because George Bush!
hmmm...
The poles are cold because of the low angle of the sunlight reaching them due to the earth’s angle of rotation axis.
The vortex is a result of the earth’s rotation.
Basically 3 jet streams...Sub-Tropical Jet (STJ); Polar Front Jet (PFJ); Arctic Front Jet (AFJ)....cold air is driven south-southeast by the PFJ; really cold air (Blue Northers in TX lingo)is AFJ....when the STJ interacts with the PFJ and or the AFJ, the central and eastern US gets lots of snow, ice, bitterly cold air. We usually think locally but a study of global upper atmospheric patterns reveals why and where blocking Omega Highs (stops or slows lateral transport of “weather”) reside. Omega blocks usually persist for 5-7 days, so think of unusually long “sucky” WX patterns you might have experienced..blame the Omega Block.’’’or vicey versey, thank the WX gods...one of which, I once was.
For a great view of fluid dynamics....click this link to see a top down loop of global water vapor....it might assist with visualization of what I just tried to convey.
http://climate.cod.edu/flanis/satellite/polar/index.php?type=polar-wv-24
Yep. We’re going really fast, around and around, with those gases in the atmosphere moving a little less than our speed and looking like the contents of a mixer. Folks on the Equator are going about a 1000 miles an hour—much faster than we are. It’s a good thing that there’s little friction in space, because our trip around the sun is moving at about 67,000 miles per hour.
That just goes to show us that it’s always something. [Little weird science there.]
Imagine what would happen if it suddenly stopped? Newtonian Laws in action!
Well we would have to ask what made it stop and how.
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