Jan. 7 - The extreme cold could cost the U.S. economy billions- but could warm up activity in a few sectors as well. Bobbi Rebell reports.
The extreme cold can put a deep freeze on a lot of economic activity- airlines grounded, trains delayed- and forget eating out- so bad news for restaurants. Even the government gets hit. Scott Bernhardt, President of Planalytics: SOUNDBITE: SCOTT BERNHARDT, PRESIDENT, PLANALYTICS (ENGLISH) SAYING: "When it gets this cold, this extremely cold, things start breaking down and that's money to the state and local governments that they haven't necessarily budgeted. And they tend to budget their snow budget based on last year or the last couple of years but you are - This is the coldest it's been in 20 years and in an awful lot of major population centers." And for the insurance industry- all the damage done to cars and homes- think burst pipes, fallen tries- these are often covered by insurance companies. The Insurance Information Institute says severe winter weather is the third largest cause of insured catastrophes- and insurers pay an average of $1.4 billion per year in winter storm claims. But Bernardt also says there will be economic benefits- take retailers who had a ho hum holiday: SOUNDBITE: SCOTT BERNHARDT, PRESIDENT, PLANALYTICS (ENGLISH) SAYING: "They can clear- you know they need to make room for the spring merchandise coming in in February. Also there is gift card redemption. Remember retailers they will sell you the card before the holidays but they don't recognize that revenue from that card until it's redeemed. So you get a cold snap like this one and people are using those cards to get those hats, scarves and gloves and they are recognizing that revenue and that is good news." Compared to the same week as last year- no surprise- snow removal is a good business to be in- as are ice melters and portable heaters, thermals etc...and of course clothing- winter boots sales up 24%, scarves, hats and gloves not far behind... and of course electricity and home heating. And though the freezing temperatures threatened to curtail oil production- for now energy futures barely budged: Oil trader Alan Harry, president of Spartan Commodity Partners was surprised: SOUNDBITE: ALAN HARRY, PRESIDENT, SPARTAN COMMODITY PARTNERS (ENGLISH) SAYING: "I think part of the reason is they think in the next 2 weeks it's not going to be as cold as what we are having right now. However I think though as the winter moves on we are going to get some extremely cold weather and with that we are going to get a rise in both crude oil and natural gas so I am surprised that it's still at these low levels." One other possible reason- the rise may be offset by expectations that- with everyone staying put- there will be less demand for fuel related to transportation.