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Baby, it’s cold outside.
Bitter cold has set in across much of the Midwest and Northeast after snow blanketed a wide swath of the country in snow, sleet, and rain this past weekend.
Wind - Chills - Temperatures - Digits - New
Wind chills have plunged temperatures into the single digits in the New York City area. Howling winds are making it feel like it is minus seven degrees. Temperatures in Upstate New York are expected to reach minus 40 degrees Fahrenheit, the National Weather Service (NWS) predicted.
In New England, temperatures are predicted to fall to as low as 20 degrees below zero around Boston and as low as 35 below zero in parts of Vermont, Maine, and New Hampshire, the NWS said.
Weather - Effects - Fatalities - Traffic - Accidents
While the cold and snowy weather will have immediate effects of increasing fatalities and traffic accidents and throwing air travel into chaos, it is also likely to have significant–albeit temporary–impacts on the economy.
Conventional wisdom holds that weather has large effects on economic performance. Media reports often cite weather when signs of an economic slowdown show up. And executives at public companies are notorious for blaming unseasonable weather for worse-than-expected performance.
Part - Wisdom - Economy - Effects - Cold
Another part of the conventional wisdom has it that the economy tends to “snap back” from weather effects. If extreme cold or snow holds back homebuilding, in one month, for example, those projects just get pushed off into warmer months. Hiring that gets delayed due to weather simply happens when it is not so terrible outside.
There is good reason for this economic folklore: it’s rooted in centuries, even eons, of human experience.
Justin - Bloesch - François - Gourio - Economists
As Justin Bloesch and François Gourio, economists at the Federal Reserve Bank of Chicago, have written:
The idea that weather is an important source of fluctuations of production is an old theme in economics. A century ago, when the economy was still in large part driven by agriculture, bad crops...
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