Source: Jackson Fine Art
Even though housing market talking heads are known for dramatizing the long term economic impact of a big snow storm, it’s basically a “snow ball’s chance in hell” that it has a lasting effect.
Given that it is early March and it is 54 degrees outside in NYC as I write this, it’s hard to think about snowstorms. However Mother Nature has a way of messing with us so I’m optimistic that we’ll get socked with at least one more big storm this month.
My friend Jason Bram, an economist at the Federal Reserve Bank of New York, was interviewed for his views on NYC snowstorms and their economic impact in Hey, Economist! How Well Do We Weather Snowstorms? He found that:
- 81% of major snowstorms (over 15 inches dumped in Central Park) began on a Friday, Saturday or Sunday
- there is no evidence that major snow storms disrupt the economy more than a few days.
In fact, the odds of repeating NYC’s snowstorm history is 0.2% or 500 to 1.
“The bottom line is, when you look at monthly or even weekly economic indicators, you rarely see a blip, even after the most severe blizzards.” —Jason Bram
This is why I go crazy at the beginning of every calendar year listening to housing prognosticators fret about severe winter weather having a far reaching long term impact on the housing market and the economy.
Consider this scenario by a couple looking to purchase their first home:
Husband: Hi honey, ready to go look for houses this weekend?
Wife: Yes, I can’t wait! We’ve been saving up for a long time and we are finally at the point where we can buy!
A big snow storm hits on Friday night…
Husband: Ugh, this snowstorm is really bad. We’d better cancel our appointment with the real estate agent to view homes.
Wife: Yes, that’s a good idea. This is so frustrating!
Husband: I know! Now we have to wait another year!
Wife: I just can’t believe it. Just when we were ready to buy, a snowstorm hits and now we have to wait another year!
Of course you can see how ridiculous this scenario is despite my John Grisham/Stephen King – like story telling skills. These buyers will simply wait until the following weekend.
Tags: Liberty Street Economics Blog, Jason Bram, economists, snowstorm
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