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71 Mentions Of "Weather" In The Latest Fed Beige Book

Tyler Durden's picture




 

There were the usual trite, forgettable highlights in the just released beige snow book, which as summarized by Bloomberg, had the following highlights:

  • FED: ECONOMY EXPANDED IN MOST REGIONS MID-FEB. TO END-MARCH
  • HIGHER RETAIL SALES REPORTED BY MAJORITY OF REGIONAL FED BANKS
  • BEIGE BOOK: LABOR MARKETS STABLE OR SHOWED MODEST IMPROVEMENT
  • REGIONAL FEDS NOTED MODEST UPWARD WAGE AND PRICE PRESSURE

One can ignore all of the above, because the only word that matters in the latest beige book was one: "Weather"

Here is a chart summarizing the mentions of "weather" since January 2014

Some highlights:

  • Weakening activity was attributed in part to the strong dollar, falling oil prices, and the harsh winter weather.
  • Residential real estate activity was steady to improving across
    most Districts, although there was some slowing in housing starts due to abnormal seasonal patterns
    owing to the harsh weather.
  • The auto industry remained a source of strength in Cleveland and Chicago. Contacts in Boston, Philadelphia, Richmond, and Dallas believe harsh winter weather had a dampening effect on activity.
  • Demand for transportation and freight services was mixed. Freight haulers in Cleveland reported that volume has declined from the high levels seen late last year. They attributed it to harsh winter weather and fallout from the labor dispute at California ports, which lessened shipments to the District.
  • Among retailers, the outlook was generally optimistic in Boston, Philadelphia, Atlanta, St Louis, Kanas City, and Dallas. Many Districts noted that savings from lower energy prices are helping to drive retail sales this cycle, as is the improving weather situation.
  • Auto sales rose in most Districts during the cycle period. Reports from Cleveland, Atlanta, and Chicago indicated that lower gasoline prices were causing consumers to shift from cars to light trucks or SUVs. New York and Philadelphia reported that sales had bounced back in March from the harsh winter weather in February.
  • Tourism and travel started to rebound from the harsh weather seen in the winter months.

The punchline comes from a rare moment of lucidity courtesy of Bank of America.

Is weather the main reason for recent weak economic data? While we would love to blame the weather for all of our bad forecasts, in reality it is hard to pin down  weather effects. A recent paper from the Chicago Fed—“The effect of winter weather on U.S. economic activity”—is the best attempt we have seen in recent years. They look at detailed data on snowfall and temperature by state and for the nation as a whole. The results show that weather effects can have a significant impact on local employment and housing activity, however, when you add it up for the nation it becomes very hard to quantify. Looking back at the very severe winter of 2013-14 they find that bad weather can only explain part of the weakness at the start of the year.

 

This puts us in an awkward spot today. There is a bit of an urban legend that weather can explain all of the weakness in the first quarter of last year and hence could explain all the weakness today. However, hindsight is always 20-20. In real time, the slowdown last year was a major surprise to economists even though we get data on the weather before we get data on the economy. Moreover, this winter is not nearly as bad as last winter—last year we had three bad months, this year only February was unusually bad (Chart 1). Economic fundamentals point to stronger growth ahead, and that remains our forecast. However, we can’t completely explain the recent weakness and hence there is a risk that growth does not pick up.

 

 

The good news that being in an "awkward spot" has never stopped economists from fabricating utter nonsense to explain why a $17 trillion economy is literally at the mercy of snow.... in the winter.

 

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Wed, 04/15/2015 - 14:21 | 5995689 NoDebt
NoDebt's picture

Janet Yellen:  I got nothin'.  Just put in weather or something.

Wed, 04/15/2015 - 14:29 | 5995717 KnuckleDragger-X
KnuckleDragger-X's picture

I just want them to admit they have no clue and are just stumbling along, throwing money at whatever they see. If they want to find out about weather, they should try farming for a few years.....

Wed, 04/15/2015 - 14:32 | 5995741 Bunga Bunga
Bunga Bunga's picture

When everything fails central planners blame it on weather. 

Wed, 04/15/2015 - 14:54 | 5995828 green sheen
green sheen's picture

These people are clueless. All they know is the interest rate is going to be the same as the default rate. When you create all the money as debt with interest there can't be enough money to pay the interest b/c the interest was never created. You'll know who I mean by 'these people' from the link.

Observe

https://www.youtube.com/watch?v=twRDQmmxLkw

Wed, 04/15/2015 - 15:21 | 5995957 KnuckleDragger-X
KnuckleDragger-X's picture

The derivatives are the killer. Even a 25 bps interest rate would put all the mega-banks in a very bad place since they wrote most of the derivatives predicated on Zirp and they can't even really cover those. Really, it now comes down to who panics first....

Wed, 04/15/2015 - 15:29 | 5995978 knukles
knukles's picture

I don't know whether they're kidding me or not.

Wed, 04/15/2015 - 19:20 | 5996880 philipat
philipat's picture

Of course, snow in winter might actually be predictable so factored into forecasts. Moving Annual Total reporting would also nicely address seasonality. Nah, lower forecasts for Q1 don't look good, better for the sheep just to pretend winter isn't going to happen then explain poor data is due to bad weather. All part of the extend and pretend game....

Wed, 04/15/2015 - 22:58 | 5997435 chilli sauce
chilli sauce's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com

Wed, 04/15/2015 - 14:22 | 5995691 MFL8240
MFL8240's picture

We have reached the point where nothing that Yellen and her clowns say is believable.

Wed, 04/15/2015 - 14:24 | 5995700 NoDebt
NoDebt's picture

At these times of low believability, it's more imporant than ever that those of you who still believe, do so fervently.

Wed, 04/15/2015 - 14:23 | 5995694 Soul Glow
Soul Glow's picture

Gold is not money in the latest Biege Book.

Wed, 04/15/2015 - 14:25 | 5995709 maskone909
maskone909's picture

i hear al roker will be the new leading fed economist

Wed, 04/15/2015 - 14:33 | 5995746 Mike Honcho
Mike Honcho's picture

"Willard Scott taught me weather and hoagies" - Roker

Wed, 04/15/2015 - 14:31 | 5995740 NoVa
NoVa's picture

Since Weather TM 

 

Wed, 04/15/2015 - 14:33 | 5995744 bnbdnb
bnbdnb's picture

Arent seasonal adjustments created to account for weather?

Wed, 04/15/2015 - 14:35 | 5995757 Hohum
Hohum's picture

No. They are created to make bad not seasonally adjusted data look better.

Wed, 04/15/2015 - 14:56 | 5995845 blu
blu's picture

I thought everyone knew that.

Wed, 04/15/2015 - 17:13 | 5996389 bnbdnb
bnbdnb's picture

However, all "bad" winter weather months are the same ones every year. So it should always smooth out.

Wed, 04/15/2015 - 14:34 | 5995747 blu
blu's picture

Yeah. Weather. Okay call it what you want to but it's still nature set out to murder us. No big surprise to me if GDP takes a hit in the wake of nature set on murder.

Wed, 04/15/2015 - 15:00 | 5995862 NoVa
NoVa's picture

Nature always wins.  Look at california desert

Wed, 04/15/2015 - 14:38 | 5995772 Bell's 2 hearted
Bell's 2 hearted's picture

"Prepared at the Federal Reserve Bank of Cleveland based on information collected on or before April 3, 2015."

some data out since april 3rd

 

retail sales - miss

empire state survey - miss

industrial production - miss

Wed, 04/15/2015 - 14:41 | 5995781 Bell's 2 hearted
Bell's 2 hearted's picture

the polar vortex of early 2014 set the bar low for early 2015 to beat ... still weak

Wed, 04/15/2015 - 14:43 | 5995785 Salsipuedes
Salsipuedes's picture

No agenda here folkspeople. Go on about your business...

Wed, 04/15/2015 - 15:19 | 5995950 El Hosel
El Hosel's picture

Its not the economy stupid, its the weather, all Federal Policy are saving us from crisis until further notice.

Wed, 04/15/2015 - 18:08 | 5996601 falconflight
falconflight's picture

The unnamed scandal is the FED's plagerizing of GOSPLAN's Pravda press releases accounting for the failure to meet the latest Five Year Plan.

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