The latest excuse for the weakness of the economy is that “the weather did it“:
U.S. housing starts recorded their biggest drop in almost three years in January as harsh weather disrupted activity, but the third month of declines in permits hinted at some weakness in the housing market. Wednesday’s data was the latest suggestion that a brutally cold winter was putting a big dent in the economy.
Of course, you can’t blame everything on Old Man Winter:
But severe weather cannot be blamed for all the slowdown in growth as the economy appears to have ended 2013 with less momentum.
“The housing sector already slowed down in the fourth quarter and it’s not picking up,” said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York. “There is more than the weather at play and the underlying dynamics are not as favorable as people thought they were.”
But the ‘weather theory’ has its doubters:
But there are some holes in the weather theory. The Northeast, which bore the brunt of the frigid temperatures and snow storms, saw groundbreaking hitting its highest level since August 2008. In addition, starts in the West, where temperatures have been a bit warmer, also fell.
From a related article on Reuters: it’s not the weather, stupid.
But the trade group said high costs were also holding back the housing industry, and the data adds to worries the U.S. economy might actually be losing momentum following a year of break-out growth.
Poor weather usually drags on growth only temporarily as businesses and consumers put off purchases. If the recent slowdown in the economy is weather related, economists expect that the trend will reverse once temperatures turn higher and spur consumers to get back to spending.
“This report will keep alive concerns in the markets that the weakening in the data recently is not just due to weather,” said Jim O’Sullivan, an economist at High Frequency Economics in Valhalla, New York.
Worries over the outlook for the economy have grown since reports showed weak hiring across the economy in December and January, when much of the country experienced unusually frigid temperatures.
Now signs of economic weakness are persisting into February.
That’s because the economy is weaker. I wonder what will happen once the Winter Olympics end, and people start to notice what is really going on. Even CNBC gets it. You have to click the link to see the video.