Just Released: Harsh Winter Weather Hampers Economic Activity in the Region
The New York Fed’s latest Beige Book report indicates that harsh winter weather hampered economic activity in the region in early 2014.
Eight times a year, each of the nation’s twelve Federal Reserve Banks produces a report on current economic conditions in its District, based largely on anecdotal information obtained from regional business contacts. The New York Fed’s report covers New York State, northern New Jersey, and southwestern Connecticut. The twelve District reports are combined with a national summary to produce what’s come to be known as the Beige Book—a report that provides some of the most timely information available on economic conditions.
The latest report, based on information collected through February 24, suggests that economic activity declined slightly to start 2014 after expanding at a moderate pace throughout most of 2013. Heavy snow and extremely cold winter weather were cited by numerous business contacts as major factors constraining economic activity. In particular, retailers report that consumer spending in January and early February was down sharply from comparable 2013 levels, though, not surprisingly, sales of cold-weather outerwear remained strong. Similarly, both auto sales and home sales in the region were said to have been hindered, at least in part, by the blustery snow and cold. And while winter storms took a toll on the region’s tourism activity, business related to the Super Bowl, held in East Rutherford, New Jersey, partially offset this decline.
Despite the harsh winter weather, job prospects in the region continued to improve at a gradual pace. Business contacts in the manufacturing and service sectors report steady to rising employment, and more firms plan to increase than reduce staffing levels in the months ahead—particularly in the manufacturing sector. One employment agency notes that many office-job openings requiring specialized skills remain difficult to fill, and that salaries generally remain flat.
As for price trends, business contacts report that pricing pressures have generally remained subdued in the manufacturing sector but have grown increasingly widespread among service sector businesses. Retailers report that prices are mostly stable, though the retail environment is described by some as increasingly promotional. Finally, banks report some further weakening in loan demand from the household sector, and steady to declining delinquency rates.
Overall, the latest Beige Book report suggests that the regional economy contracted slightly at the beginning of 2014. However, it’s expected that much of this activity will be made up when the warmer weather arrives. Indeed, despite the recent pause in growth, business contacts remain widely optimistic about the near-term outlook. The next Beige Book report, to be released on April 16, should shed some light on this issue.
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.
Jaison R. Abel is a senior economist in the Federal Reserve Bank of New York’s Research and Statistics Group.
Jason Bram is a research officer in the Research and Statistics Group.