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Snowfall's Financial Impact May Not Be So Stormy

Ben Ochstein and Julie Brown stocked up on fire logs at Frager's Hardware in Washington as snow began to fall in earnest Feb. 10. As hardware stores replenish supplies sold in the wake of recent snowstorms, the economy stands to benefit.
Jacquelyn Martin
/
AP
Ben Ochstein and Julie Brown stocked up on fire logs at Frager's Hardware in Washington as snow began to fall in earnest Feb. 10. As hardware stores replenish supplies sold in the wake of recent snowstorms, the economy stands to benefit.

Some forecasts — of the economy, not the weather — already are calling for a dampening effect from the record snowfall that has pounded the East and Midwest in recent days, but some experts say it is difficult to gauge and perhaps won't be as bad as many think.

First, the bad news: Washington, D.C., at the epicenter of the severe weather, has been shut down for days, and Office of Personnel Management chief John Berry has said each snow day costs taxpayers $100 million in lost productivity from federal workers.

There's also lost productivity for state and local governments, as well as the cost of snow removal. Maryland, Virginia and the District of Columbia are all likely to seek emergency federal aid to pay for the cleanup.

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And then there's the airlines. Based on totals reported from the airlines, some 7,000 flights have been canceled since Wednesday.

"We're still trying to get our arms around the number of cancellations," Air Transport Association spokesman David Castelveter said.

Normally, he said, airlines make back lost revenue on a lot of those canceled flights as business travelers reschedule meetings and vacationers rework their itineraries. But this time, with multiple storms hitting multiple major hubs, is different, Castelveter said.

"What is unique is that we had a sizable event last week and then another one now," he said. "So, you had a one-two punch, and that causes a ripple effect."

That ripple effect means flights rescheduled because of last week's storms are being bumped again. "As a result, many business travelers will decide to forgo that meeting altogether, and other travelers will just give up on that vacation," he said.

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And now, for the not-so-bad news: Small businesses — retailers and hardware stores, for example — saw a run on their inventories. Not only did everything from snow shovels and propane to long underwear and peanut butter fly off shelves — all good — but now stores will have to restock shelves. That has its own ripple effect — a positive one.

"There will of course be winners in all of this," said Lynn Reaser, president of the National Association for Business Economics, or NABE.

Even though the storms will be a "net negative" for many small businesses, in the long run, it's not likely to be anything resembling a disaster, Reaser said.

"The cold weather could possibly knock off a few tenths of a percent of GDP growth at the beginning of this year." But a year from now, it will be looked back on as "just a blip on the radar screen."

Reaser also pointed out that technology has helped reduce the loss in productivity. More people than ever before are working in information-related sectors, and many of them are wired to work from home.

"The extent that people have been able to work from home has made a big difference," she said. "Twenty years ago, the infrastructure just wasn't there, but today a lot of business can be transacted electronically."

Gil Gordon, who owns his own telecommuting consultancy, would place that time frame at closer to 10 years. Before that, you "wouldn't see what you're seeing now," he said.

Some key changes have occurred since 2000, he said. Many more people have employer-provided computers in their homes and the high-speed Internet connections to support them. And then, there's what Gordon calls the mental infrastructure.

"People are comfortable with telecommuting. It's part of their mindset," he said.

Gordon said he conservatively estimates that 30 percent of the office workforce is wired and, as a result, able to be productive on a day when employees would have been otherwise unproductive.

And, its not just typical office workers who are logging into the office system, Gordon said, noting the large amount of retail business that is now conducted online.

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