East's Storm Likely to Hurt U.S. Economy

From Reuters

The blizzard that crippled the East Coast this week will probably affect retail sales for January and hurt the overall economy to some degree, Commerce Undersecretary Everett Ehrlich said Wednesday.

But the impact could be partially offset by increased purchases of snow-removal equipment and home-related activities, he said.

"I would presume that the snowstorm has a negative effect on GDP [gross domestic product] simply because it reduces economic activity," Ehrlich said. "On the other hand, you get compensating variations."

Ehrlich said it was premature to predict the exact size of the economic impact of the storm, which dumped 2 feet or more of snow on many Eastern cities, snarling governments, airports, roads and businesses.

The blizzard may also affect prices in the supermarket for fruit and vegetables from frost-tinged Florida, officials said Wednesday.

"It's nothing nearly approaching a disaster," said Bob Blankenship, spokesman for the Florida Department of Agriculture. "We have pockets of heavy damage, but it's not widespread."

Historically, Florida's $1-billion winter produce industry has supplied much of the nation during the cold months and, despite vigorous new competition from Mexico, it remains the leading produce source for most U.S. cities outside the Southwest.

The blizzard, which sent subfreezing air deep into southern Florida, forced farmers statewide into emergency operations to protect their crops. Production of strawberries, beans, squash, sweet corn, cucumbers, peppers, tomatoes and citrus will all be affected by the freeze to some extent, officials said.

Growers were uncertain how much prices will rise, but freezes generally mean higher costs for consumers.

"Every time the supply goes down, the price goes up. That's a normal twist," Blankenship said. "And we're certainly going to have some interruption of supply."

In addition to hurting mature crops, the freeze caused some damage to plants and tiny blooms, which is almost certain to diminish yields in coming weeks.

Meanwhile, Ehrlich said he expects that his department will be able next week to publish some of the economic data that have been delayed by the government shutdown and the storm.

The reports might include November housing starts, October trade figures and revised gross domestic product data for the third quarter, he said.

Erhlich said it will probably take several weeks to release November data on durable goods, wholesale trade and construction.

He said there will be no gaps in the month-to-month series of major economic indicators although some preliminary reports might be scrapped.

Erhlich said the department hopes to have as much data available as possible before the Federal Reserve Board's Federal Open Market Committee meets Jan. 30-31.

"We're very cognizant of those dates," he said.

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