Monday, February 17, 2014

Big freeze and storms in the US impose losses up to $40 billion

Peter Morici in UPI: The January freeze and crippling storms gripping the eastern United States and upper Midwest are having significant effects on normal life and commerce. Gauging its ultimate impact on the U.S. economy -- still affected by a nagging hangover from the Great Recession -- is far more complex than merely adding up lost retail and insurance payouts for damage.

The United States braces for cold and storms each winter but this year's conditions are more severe than cities and counties customarily prepare to address. Many commercial structures and homes weren't built for these unanticipated conditions.

The storms these past few weeks in New York would have been manageable for Minneapolis but the Big Apple isn't set up for a Minnesota winter. Nor is Minnesota for arctic conditions. For a few days, many restaurants closed and workers didn't go to their offices. Overall retail sales were adversely affected, as many shoppers couldn't so easily get to the malls. Pipe bursts and similar mechanical breakdowns damaged homes and commercial structures.

Many businesses closed and lost worker productivity, even though many employees will still be paid. Overall ... the freezing temperatures and ice imposed big losses. Initially, lost economic activity and damages will range between $20 billion and $40 billion
Still, it is important to recognize, unlike the 1950s when the nation's workers were much more concentrated in factories, most of the lost productivity and commerce in a modern service economy is more easily made up once warmer weather returns....

An 1895 painting by John Henry Twachtman, "Snow"

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