The mild winter: 2012’s economic powerhouse

By John Stodder

What has had the biggest influence on business so far in 2012? One strong contender was the mild winter.

The recent weather was given some of the credit for improving the employment situation for January and February in a USA Today report, which said, “The nation’s mild winter has added thousands of jobs this year, boosting crucial businesses such as construction and auto sales.” It also reached its hands into a wide range of other industries, including retail, agriculture and tourism.

Gallup’s economic survey on consumer spending identified another way that the mild winter may have exerted its influence on recent economic numbers. Gallup found that consumer spending in February 2012 was 3.3 percent higher than it was in February 2011.

To underscore the point, Gap Inc. reported its first sales gain in eight months in February, joining retailers such as Target, Macy’s and Victoria’s Secret in seeing same-store surges. Mild weather was said to have inspired shoppers to start buying their spring outfits a little earlier this year. Home Depot’s Q4 numbers for 2011 were up 32 percent because “mild weather throughout parts of the United States gave homeowners the chance to work on homes projects in the winter,” according to the trade publication Chain Store Age. Lowe’s said it also gained, citing the same reason.

But was mild winter a false friend to job seekers? USA Today was one of several news outlets, including the Financial Post and the Wall Street Journal, that quoted a client letter from RBC Capital Market’s Chief U.S. Economist Tom Porcelli, who questioned whether much of the last several months’ uptick in employment could be due to employers moving up planned hiring actions as a result of the favorable weather conditions. Also, “seasonal construction firing was much less than usual,” Porcelli wrote, because the mild winter allowed sites to stay open for business.

That means job gains in weather-affected sectors could be illusory. Contractors might have expected to lay off their construction teams with the arrival of winter, and then hire again in the spring. Thanks to the mild winter, the construction work continued, but ended sooner. That’s good news if the contractor can hustle more work to fill the gap this spring; but if it can’t, it’s a wash that will be reflected in flatter employment numbers in the coming months.

Drilling down to specific industries and activities reveals the mild winter’s unambiguous sway.

To choose just a few examples:

When the weather turns hot, corn and soybean farmers in Illinois and Iowa are concerned that their crops will miss the moisture that wasn’t stored in the soil this winter, despite the fact that overall precipitation levels were normal.

Farmers in the Midwest are also concerned about the mild winter’s kindness toward insects, according to several agricultural sites, such as The Field Position, High Plains Midwest Journal, and Farm Industry News.Com. Because temperatures in many areas failed to reach zero, some agricultural pests that normally die off in winter might have survived. Of particularly concern are winged aphids and bean leaf beetles.

The mild winter made the sap used for producing maple syrup in the Northeast run a full month earlier in some places, and that means the season could end early, according to an AP story. Once trees start to bud, the sap develops an “off” flavor, according to upstate New York sap tapper Helen Thomas. The AP couldn’t resist saying the syrup industry would have to “go with the flow” with respect to the timing of their harvest.

Thanks to the mild winter, U.S. airline flights took off and landed on time more often in January 2012 than in any previous January on record.

This month, the Coachella Valley Wildflower Festival in Palm Springs, Calif., had to go on without much in the way of desert wildflowers, due to below average rainfall in California, according to MyDesert.com.

Ski resorts in upstate New York, Pennsylvania and New England mostly reported short seasons with many empty chair lifts. Numbers were also down in Colorado and California, although the latter state’s wineries benefited as a result, vintners told News10 in Sacramento.

John Stodder is the roving Web editor for The Dolan Co.