The Economic Dig Out of the Snow
After last week’s record snowfall, the DC region and other areas now have the difficult task of digging out of the snow. In addition to prompting closures of local businesses and schools, the snowstorm brought the federal government to a virtual standstill. Indeed, today is the first day federal agencies are opening on time since February 4. Unfortunately, the combination of the heavy snowfall, blizzard-like conditions, and power outages left me not only snowbound, but also without an Internet connection. Hence I could not even spend the week blogging from home! But now that we are all trying to get back to normal, at least one question is, what will be the economic impact of the snowstorm?
On the one hand, the storm heaped a signficant economic toll on governments and businesses forced to close their doors. Hence, the Office of Personnel Managment estimates that the federal government loses about $100 milliion in productivity and other costs each day it is closed. Along these same lines, one admittedly rough estimate from a Maryland state agency predicts the storm may be responsible for some $830 million of losses in the state’s economic activity. Similarly, an analyst at George Mason estimates that the storm could cost businesses in the area hundreds of millions of dollars in potential sales. Of course it goes without saying that, given the recession, many businesses (and governments) could ill afford to take another economic hit.
To be sure, that same George Mason analyst notes that, based on the economic activity associated with previous snowstorms, it is entirely possible that these economic losses may be recouped in later months. It also should be pointed out that not all economic activity was down during the storm. Indeed, many people continued working from home. Still others actually stayed in their place of business overnight to keep their doors open. Moreover, what was one firm’s loss was another’s gain. Hence, as you can imagine, local restaurants and stores, especially those downtown that relied heavily on government employees, were hit particularly hard. As the president of the DC Chamber of Commerce noted, you simply can’t make up five or six days of lost sales. However, grocery stores and hardware stores saw a jump in sales–evidenced by the very long lines in stores and often empty shelves! According to the Washington Post, one Capital Hill hardware store recorded its biggest sales day on record during the storm. Other businesses also may have fared well, or at least may have broken even. This includes gyms, and even some hotels that found themselves with guests forced to extend their stay–and eat in.
So maybe it is too soon to tell what kind of economic impact the storm will have on the region, and whether or not any losses can be recovered. Though I am sure most of us are happy to finally have the opportunity to get out of the house and eat, shop or otherwise contibute to the local economy. There’s a start. . .