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Sat, Mar 02, 2002 - Page 21 News List

Warm weather helping recovery in US

HELP FROM ABOVEA warmer than normal winter kept shoppers in the malls when sleet, ice and snowy weather usually confine consumers to their couches at home

REUTERS , NEW YORK

America may have the heavens to thank for a surprisingly swift recovery from recession and the worst terrorist attack in its history.

The warmest winter on record kept shoppers in the malls and home builders humming through months when sleet and ice usually confine consumers to their couches and force contractors to holster their hammers.

The economy expanded at a far faster rate than initially reported in the last three months of 2001, the government said on Thursday, as consumers snapped up homes, cars and big-ticket items despite a wave of layoffs after the Sept. 11 attacks.

Yes, bargain basement discounts, the lowest interest rates in four decades and tax rebates from Washington helped keep cash registers ringing and real estate brokers hopping. But Mother Nature lent a helping hand.

November through January were the warmest in US record books. The first month of 2002 was the warmest January in 123 years, according to the National Oceanic and Atmospheric Administration (NOAA).

That may alarm green groups, who have cited this winter as evidence of man-made global warming. But not economists, who say the mild weather has given the economy an added shove just when it needed it most.

"The warm winter blowout has no doubt contributed to improved economic activity in the past few months," said Don Rissmiller, an economist at the International Strategy and Investment group.

A warm winter might be bad news for seasonal retailers stuck with their snowblowers and wool sweaters. But it generally translates into higher traffic through malls and car showrooms.

In the mood to spend

Economists said the mild weather probably gave consumers a psychological boost, keeping them in a spending mood even as nearly 600,000 Americans lost their jobs after the Sept. 11 attacks.

"The warmer weather is certainly one factor that has helped. It came in a quarter in which employment couldn't have worked harder against consumers spending a lot of money," said UBS Warburg economist Susan Hering.

With oil and energy costs already sharply lower in late 2001 from the start of the year, and warmer temperatures reducing the demand for heat, smaller energy bills translate into more cash in Americans' pockets, she said.

"That's real money. That's money that Mother Nature is never going to reclaim," she said.

The NOAA said US temperatures in November through January were 2.4 C above averages since 1895. Temperatures deviated most from averages in the usually frigid north and Northeast, the NOAA said.

The numbers tell a compelling tale. The government said on Thursday consumer spending rose at an annualized 6.0 percent pace in the last three months of 2001 -- nearly double the pace for the year as a whole -- and the fastest pace since 1998.

Retail sales surge 1.2 percent

Retail sales, excluding automobiles, surged 1.2 percent in January. Car sales have dipped since a banner October, when automakers offered too-good-to-resist zero percent financing deals, but have held up surprisingly well.

And the impact of unseasonably warm weather, coupled with low mortgage rates, have keep US housing activity strong despite the recession. Existing home sales surged by a record 16.2 percent in January to a record pace of 6.04 million.

"The weather was so good across the country that every region in the country responded positively to the mild weather," said David Lereah, chief economist at the National Association of Realtors.

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