February 18, 2015 Reading Time: < 1 minute

The supercold weather has made economists’ job a little harder this winter, as they try to paint a picture of consumer and business behavior beyond that of people simply wanting to stay inside for fear of freezing.

For instance, this morning we learned that housing starts in January were down 22,000 from December, and housing permits – an indicator of future activity – were down by 7,000. Both missed expectations, although multifamily housing activity continued to show the health that single family homes are still lacking.

But even after seasonally adjusting the numbers, there’s still the possibility that some areas of the country that don’t usually see such cold weather saw suppressed activity because of the weather, said Bob Hughes, senior research fellow at the American Institute for Economic Research.

Also today we received data from the Federal Reserve showing that industrial production rose 0.2 percent in January, bouncing back from a dip in December, but still below expectations.  That, too, had the potential to be affected by the weather.

For instance, electric and gas utilities, which make up a small portion of industrial production, surged in January, as people used more fuel to stay warm.

And, interestingly, another portion of industrial production, mining, fell by 1.0 percent. Mining includes fracking, and low oil prices have caused some companies to pull back on activity. Support activities for mining, such as drilling, fell by a remarkable 10.3 percent in January. So that could be due to lower demand. But there’s also the potential that drilling slowed because of the cold weather, Hughes said.  

The biggest portion of the industrial production numbers, manufacturing, increased by 0.1 percent. That gain continues a trend of acceleration in the year-over-year growth rate in recent months, Hughes said.

Aaron Nathans

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