Blaming the weather for the sullen state of corporate or economic affairs has become a daily occurrence by analysts, pundits and corporate chieftains. However, Bloomberg's Rich Yamarone notes that while there has undoubtedly been a larger-than-normal impact this year, some sub-components of headline indicators suggest underlying weakness without the influence of snowstorms. Sinking economic activity cannot be blamed solely on poor weather, he adds, noting one client's comment that, "If we adjusted for weather, Napoleon would have taken Russia in 1812."
While we have disavowed the muppetry of the weather-blamers (with housing data as the best example that disproves the fallacy), and noted that outlooks have also been reduced (which seems like the surveyed are better weather-forecasters than industry "see-ers", Yamarone notes:
Several indicators last week showed the influence of bad weather, but digging deeper and focusing on sub-components that were not affected by the weather also reveals softer economic conditions.
The National Federation of Independent Business’s Optimism Index (NFIB) fell 2.7 points to 91.4 in February — its lowest reading since March 2013. One sub-component, the NFIB’s “Good Time to Expand” index, fell two points to 6.0 last month. This has nothing to do with weather since it is reflective of expectations three months out, in May.
Restaurant sales, which are very discretionary in nature, inched up 0.3 percent versus January, 2.5 percent from year-ago levels. Adjusting for inflation, the real level of restaurant sales is 1 percent — a very weak posting. A sub-4 percent (nominal) pace has signaled recession in the past.
Of course, the weakness in Q1 GDP is quickly hockey-sticked away by "economist" expectations for the future - just around the corner...
But, as Yamarone concludes:
when attempting to decipher the underlying trends in the economy, it is probably wise to ignore the headlines and focus on those components that are less weather related. Last week’s data imply sustained weakness during the next few months, none of which is likely to be weather related.