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It Turns Out That The "Harsh Weather" Is Actually Boosting The Economy

Tyler Durden's picture




 

Something curious happened earlier today: January spending - which will be part of Q1 GDP - soared, which, as we reported earlier, was entirely on the back of a record monthly surge in spending on services, while spending on goods, both durable and non-durable, dropped. The record January spending can be seen on the chart below.

 

What happened? Goldman explains.

January nominal personal spending rose 0.4% (vs. consensus +0.1%). Both durable (-0.4%) and nondurable (-0.7%) goods spending fell on the month. Services spending rose a sharp 0.9%, the strongest gain since the bounce-back from the September 11 attacks in October 2001. Out-sized gains occurred in two categories of services spending: household utilities (+9.7%), boosted by colder weather, and health care (+1.6%) in light of enrollments in the Affordable Care Act exchanges.

So there you have it: the first official confirmation that in addition to all its adverse impacts on employment, previously highlighted by everyone with a frontal lobe and even the CBO, in January Obamacare had a dramatic impact on US consumer discretionary impact. As in lowering it.

But far worse was "utilities", namely the "harsh weather", which was the primary reason for the surge in spending on non-discretionary services. Which also means far less spending on stuff one enjoys blowing money on, and far less revenues and profits by those same retailers whose seemingly infinite advertising budgets are what continue to send the social networking bubble to unseen highs.

The good news: since GDP is driven by spending of any kind - be it good or bad - in the first month of the quarter, the "harsh winter weahter" actually had a very positive imapct on GDP, which as a result of the surge in spending, will now have a higher number in the BEA's bean counting models. As will Obamacare, through the magic of Keynesian accounting.

So the next time someone blames the weather for crushing economy in the first quarter, tell them that even Goldman has shown this is a lie. Then again, it is so much more easily comprehensible to the average idiot that the economy is hurt rather than boosted by the weather, that it is probably not even worth the effort.

 

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Mon, 03/03/2014 - 15:09 | 4502739 onewayticket2
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my wife was very busy on the interweb.  and my plow guy made a killing. 

Mon, 03/03/2014 - 15:13 | 4502764 Al Huxley
Al Huxley's picture

'Mister Plow, that's my name, that name again is Mister Plow'. Sorry, couldn't resist.

Mon, 03/03/2014 - 15:15 | 4502777 insanelysane
insanelysane's picture

as long as he's not plowing the wife.

Mon, 03/03/2014 - 15:25 | 4502808 macholatte
macholatte's picture

 

Obamacare = that giant sucking sound as the life is drained from the few humanoids still undead.

Agent Smith: Never send a human to do a machine's job.
Agent Brown: If, indeed, the insider has failed, they'll sever the connection as soon as possible. Unless...
Agent Jones: ...they're dead. In either case...
Agent Smith: ...we have no choice but to continue as planned. Deploy the sentinels. Immediately.

Mon, 03/03/2014 - 15:31 | 4502846 Shocker
Shocker's picture

Right, the Recovery is really going great

 

Layoff / Closing List: http://www.dailyjobcuts.com

-

Mon, 03/03/2014 - 15:10 | 4502740 TeamDepends
TeamDepends's picture

Nobody could have seen this byproduct of global warming, later dubbed "winter", coming.

Mon, 03/03/2014 - 15:15 | 4502785 insanelysane
insanelysane's picture

polar vortex!

Mon, 03/03/2014 - 15:10 | 4502741 The Most Intere...
The Most Interesting Frog in the World's picture

WOW GLOBAL WARMING REALLY IS HURTING THE ECONOMY....

Mon, 03/03/2014 - 15:12 | 4502756 The Most Intere...
The Most Interesting Frog in the World's picture

health care (+1.6%) in
light of enrollments in the Affordable Care Act exchanges.

 

DEFLATION PROBLEM PERMANENTLY SOLVED...

Mon, 03/03/2014 - 15:10 | 4502745 Shizzmoney
Shizzmoney's picture

Folks are spending more on healthcare and heating and rent.

Retail boom to follow I am sure \sarc

Mon, 03/03/2014 - 15:11 | 4502747 BeetleBailey
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<------Fucking God Damned BULLISH!

<------Fucking God Damned FUCKED!

Mon, 03/03/2014 - 15:12 | 4502759 detached.amusement
detached.amusement's picture

right, since el nino is stronger than the sun...it must be that lack of strong el nino that's causing all this cold weather

Mon, 03/03/2014 - 15:13 | 4502763 Rockfish
Rockfish's picture

Redbox, netfelxs, Papa Johns.

Mon, 03/03/2014 - 15:20 | 4502801 Mrs. Cog
Mrs. Cog's picture

or... extra firewood, moar canning jars and a few new books? 

Mon, 03/03/2014 - 15:32 | 4502850 Skateboarder
Skateboarder's picture

Aren't there apps for all these things by now? /s

Mon, 03/03/2014 - 16:23 | 4503194 Hulk
Hulk's picture

"Living at nature's pace" One of my favorites by Gene Logsdon

http://www.amazon.com/Living-Natures-Pace-Farming-American/dp/189013256X

Mon, 03/03/2014 - 15:13 | 4502765 CrashisOptimistic
CrashisOptimistic's picture

Note that oil $100+ for the last month now will boost retail sales via gasoline.

Mon, 03/03/2014 - 15:14 | 4502772 krispkritter
krispkritter's picture

We're up! We're down! We're over here! No, we're over there! Look! A squirrel taking a dump!  I'm taking a six pack and going for a walk in my woods...sigh.

Mon, 03/03/2014 - 16:30 | 4503239 Hulk
Hulk's picture

stopping by woods on a snowy evening

http://www.youtube.com/watch?v=hfOxdZfo0gs

Mon, 03/03/2014 - 15:15 | 4502782 lolmao500
lolmao500's picture

WW3 will actually boost the economy too Krugman told me so.

https://twitter.com/MiddleEast_BRK/status/440551263873163264/photo/1

Polish headline : THOUSANDS OF RUSSIAN TROOPS ON THE BORDER WITH POLAND!

Mon, 03/03/2014 - 15:35 | 4502855 Bonapartist
Bonapartist's picture

Variation on "Gleiwitz Incident" forthcoming.

 

Mon, 03/03/2014 - 15:38 | 4502886 saints51
saints51's picture

I see some are stating possible war games.

Mon, 03/03/2014 - 15:18 | 4502787 RevRex
RevRex's picture

Heating Degree Days have skyrocketed this winter compared to the last ten, yet DEMOCRAT LIARS still try to convince people that Global Warming is real....

People need to google CLIMATE DEFINITION, and then they will realize that CLIMATE = THE WEATHER prevailing in an area.

Some should also google the definition of GLOBAL, because it means ALL OVER THE GLOBE!

HOW can global warming be real when CO2 shot past 400ppm, yet BOTH Ice caps grew in 2013?

 

2013-2014 is shaping up to be the third coldest year on record......which law of thermodynamics creates record cold from GLOBAL WARMING????

Raise your hand if you are so stupid that you just realized that weather changes?

Down arrow me if you are a Democrat coward who can't face the facts!

 

Mon, 03/03/2014 - 15:39 | 4502894 Bonapartist
Bonapartist's picture

Ice cover on Great Lakes near record- Al Gore to mourn the event  by buying another Montecito mansion.

Mon, 03/03/2014 - 15:17 | 4502791 ShrNfr
ShrNfr's picture

If you look at the spending, it was really more in the order of ObamaNationCare transfer payments than anything else.

WSJ:

 

Incomes in January were boosted by several provisions of the Affordable Care Act, including subsidies some Americans now receive to offset health insurance costs, changes to funding for Medicare and Medicaid and other benefits from expanded coverage, the Commerce Department said. Social security cost-of-living adjustments that took effect in January also contributed to the overall increase.

Stronger demand for health-care services as a result of the health-care law partially drove the rise in services spending, the Commerce Department said.

Mon, 03/03/2014 - 15:20 | 4502802 Yen Cross
Yen Cross's picture

   Paging Joe "Pinocchio" LaVorgna...

Mon, 03/03/2014 - 15:24 | 4502812 ebworthen
ebworthen's picture

It's weather folks; nature doesn't have a thermostat you can set, she does what she wants and we have to live with it.

The sensationalized news coverage last night of the "deadly swath of snow and ice barreling across the Midwest on it's way to the East Coast" was comical.

You mean as Spring approaches there will be colliding high and low pressure systems and swings between arctic and equatorial air currents?

My God! 

Next you'll tell me that solstices and the length of the day affect temperature and the ability to grow crops!

Something must be done! 

Summon the Scientists! 

Smash the reliquaries! 

We must defeat this weather!

(lost our fucking minds)

Mon, 03/03/2014 - 15:26 | 4502815 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

My buddy owns a plant nursery, this time of yea, he is raking in alot of dough, people are spending it's just not across the board.

Mon, 03/03/2014 - 15:33 | 4502859 ebworthen
ebworthen's picture

Ah yes, Spring at the Nursery, people spending $200+ on annuals that will be dead in six months; and another $200 on high nitrogen fertilizers for the lawn that will make them have to water and cut the grass more often.

Cha-ching!

Mon, 03/03/2014 - 15:46 | 4502925 Bonapartist
Bonapartist's picture

Ahh nurseries- what a fucking scam. 

Mon, 03/03/2014 - 15:25 | 4502817 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Double post *

Mon, 03/03/2014 - 15:28 | 4502839 JayKitsap
JayKitsap's picture

The trade balance improved also in January, paid the Gas Bill and bought less Chinese STUFF.

But each month this year will be more going to Health Insurance and less to goodies, travel, restaurants, etc.  Anyone notice how many stores are closing this year, it is bunches and bunches.

Mon, 03/03/2014 - 15:30 | 4502843 NoTTD
NoTTD's picture

Sure.  That massive surge of hundreds surging up for ObamaCare is what raised medical spending.  More people have lost policies thna haver bought them.   Can these guys not address anything without pimping for Obama?

Mon, 03/03/2014 - 15:31 | 4502845 PontifexMaximus
PontifexMaximus's picture

I am happy that we are talking about the weather. The Ukraine story is mediaticaly beaten to death, no one cares about it. Probably they will get it, that they have to speak Russian beside Ukraine or vice versa. But, well done Vlad, send those morons as Ashton to hell by not answering , same as with the muslim named man in washington.

Mon, 03/03/2014 - 15:32 | 4502849 Sick
Sick's picture

This increase in spending is nothing more than inflation.

Mon, 03/03/2014 - 16:17 | 4503157 yrbmegr
yrbmegr's picture

Perhaps even Goldman can understand that weather can affect different sectors of the economy differently.

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