The brutal cold snap that gripped much of the nation since just after the New Year is easing up with temperatures returning to more seasonally normal levels, so I’m predicting that we’ll see fewer video clips of people tossing pans of hot water into the frigid air and guys (it’s always men, usually young ones) plunging into a hole cut into a frozen lake.
My second prediction is that the financial impact of the “polar vortex” will be given brief note and quickly forgotten. It didn’t take long for a research house called Planalytics Inc. to peg the costs of the cold snap at $5 billion with a 0.2 percent impact on the first quarter GDP. Most of that is because the weather affected the daily lives of roughly two-thirds of the people in the US. This was duly noted in the news media.
Who knew that what we used to think of as a free day, an unscheduled day off from school or an excuse not to make the drive into work, had such a significant impact on the economy. It’s way more than that, of course. Cancelled flights, lost workplace productivity, and with the furnace working overtime, higher energy bills all figure into the tally.
And while oil and natural gas is a 24/7 industry, the cold does have an impact on operations in places like North Dakota. Actual production figures won’t be known for a few weeks, but several commodity analysts were quoted as saying production from North Dakota’s Bakken play will be curtailed with a concurrent narrowing of the discount-to-WTI that Bakken sells for.
And then things return to normal.
It is human nature to react to unexpected events that upset our daily rhythms. It’s likewise in our nature for our memories of such events to fade once things get back to normal. This isn’t the case if the tornado went down your block or the creek flooded your house, but for great majority of people, we get annoyed at the inconvenience or build a snowman in the front yard, but we quietly welcome the return to the predictability and comfort of the routine.
One of the news stories about the $5 billion hit the polar vortex will have on the US economy ended with an upbeat acknowledgement of how human nature drives the economy. This article, from a paper in the UK no less, tempered the bad news with a closing quote from economist Nariman Behravesh, of IHS Global: any decline in GDP would, he said, “probably all be gained back in the second quarter.”
So, as the mercury rises over the next few days, it’s good to know that we can stop worrying, at least until the next disruptive weather event comes along.