|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
The Auto Beat
Byte of the Apple
Europe Insight
Eye on Asia
Getting In
Investing Insights
The New Entrepreneur
NEXT: Innovation Tools & Trends
On Media
Technology at Work
The Tech Beat
Traveler's Check
TECHNOLOGY
Product Reviews
Tech Stats
Hands On
AUTOS
Home Page
Auto Reviews
Car Care & Safety
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip FINANCE Investing: Europe Annual Reports Bloomberg BW50 SCOREBOARDS Hot Growth Companies: 2008 Mutual Funds Info Tech 100 B-SCHOOLS Undergrad Programs Rankings & Profiles |  |
MARCH 6, 2006
What Got The Economy's Bounce Going From retail sales to housing starts, the January economic data far exceeded expectations. Economists logically assume that the month's record warm temperatures, which averaged 39.6F, generated a lot of activity that wouldn't normally have occurred. However, the crucial question is: Just how much of an effect did the weather actually have? UBS (UBS ) economist James O'Sullivan took a stab at quantifying the impacts. He looked at the historical relation-ship between data from several economic reports and deviations from the average December and January temp-eratures. December temperatures were used to capture any weather-related distortions that could carry over into January. Based on these past relationships, the above-average January temperatures provided a 1.4-percentage-point boost to retail sales. Housing starts got a weather-related increase of approximately 200,000 units at an annualized rate, while the balmy temperatures may have accounted for all of the 0.7% rise in manufacturing output. Moreover, the UBS results show that the job growth number was about 69,000 higher than might have been expected had January temperatures been just average. The calculations are not meant to provide exact readings after accounting for weather distortions, cautions O'Sullivan, but it's clear the effects in some cases may have been large.  The results show how the government's seasonal adjustment process, which tries to account for typical seasonal variation, can go awry when patterns are atypical. For example, the UBS report notes that the Labor Dept.'s seasonal adjustment expected a decline of 316,000 jobs. In reality, only 270,000 workers were let go, due to the warm weather. As a result, the seasonally adjusted gain was estimated at 46,000, far above the recent trend.That process played out across much of the January data. One implication: Mild temperatures tend to bring forward a lot of activity that would have occurred later. As the weather reverts to the norm, February and March data may end up looking weaker than they would otherwise.  By James Mehring in New York Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2006, Bloomberg L.P.Terms of Use | Privacy Notice |
Printer-Friendly Version