Is Frigid Winter Weather Cooling off the U.S. Economy?

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Based in New York, David Woo is the head of global rates and currencies at Bank of America Corp., and when it comes to calculating economic growth, David Woo suggests to investors in an article in Bloomberg News, that financial markets tend to react or to overreact to the weather conditions. Woo finds the colder, the slower. This has been the coldest December since 2009 and David Woo has reported that “We are concerned that the market may struggle to see through the ill effects of the current unusually cold winter.”

Is frigid winter weather cooling off the U.S. economy? January saw a significant slowdown after a drop in new orders, and according to NBC News, construction spending is reported down as well. January’s teeth chattering deep freeze is only partly to blame.

  

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An economic system consists of the production, distribution or trade, and consumption of limited goods and services by different parties in a given geographical location. The economic agents can be individuals, businesses, organizations, or governments. Transactions occur when two parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency. In the past, economic activity was theorized to be bounded by natural resources, labor, and capital. This view ignores the value of technology especially that which produces intellectual property.

At the end of December it has been reported that 1m Americans lost extended federal unemployment benefits. The Guardian reported that Retail employment was down 13,000 and the Federal government cut 12,000 – 9,000 jobs from the post office. In January the unemployment rate for teenagers was 20.7%, for black people it was 12.1% and Hispanics 8.4%.

The English words “economy” and “economics” can be traced back to a Greek word which translates as one who manages a household. A given economy is the result of a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions.

Chief economist of Moody’s Analytics, Mark Zandi, stated “Cold and stormy winter weather continued to weigh on the job numbers. Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad-based across industries and company sizes, the biggest exception being manufacturing, which shed jobs – but that is not expected to continue.” For employment at Moody’s, click here.

Image Credit: www.businessweek.com