Polar Vortex May Steal Christmas This Year

Amanda Gatlin - Author

Nov. 16 2014, Updated 12:18 p.m. ET

Just as consumers were starting to look up, a second Polar Vortex bears down, threatening to steal Christmas profits. Economists have anticipated the arrival of the stimulus from plunging gas prices, postured to help revive the American economy. However, the Polar Vortex may be putting a halt to holiday spending, Fox Business reports.

In all, the Vortex is expected to affect an estimated 200 million Americans, or about three-fourths of the country. Only Hawaii, Florida, and the Southwest may be spared. Now, Wall Street analysts are scurrying to estimate the offset.

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Looking back at the last three months of 2013, more than $100 billion was wiped from economic activity — holiday shopping — which was largely due to the weather. The Polar Vortex helped propel first quarter GDP into a historic decline, into negative territory, with a 2.9 percent drop. All the while the Federal Reserve was still buying tens of billions of dollars in debt securities.

Already Deutsche Bank is estimating that the 40 cent plunge in gas prices per gallon would add about $40 billion to consumers for spending this holiday shopping season. Gas prices in the U.S. recently broke below the psychological $3 mark for the first time since 2010, at about $2.92 on average for regular unleaded, down from $3.70 last June.

Falling gas prices buoyed consumer confidence to a seven-year high, and retailers are still expected to hire up to 800,000 seasonal workers this holiday season, reports the National Retail Federation, with Amazon, Walmart, Macy’s, and Kohl’s among the national chains increasing their holiday jobs.

Joseph LaVorgna and Brett Ryan, economists at Deutsche Bank, say, “According to our calculations, every one cent annual change in gasoline prices is worth approximately $1 billion in annual U.S. household energy consumption.”

They go on to say that if the current 40 cent decline in energy costs is maintained, then consumer cash flow would improve roughly $40 billion. This would be the equivalent to almost three-tenths on annualized GDP growth.

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However, with the second Polar Vortex, the fourth and first quarter GDP may not play out as expected. According to Zerohedge, the implication is that Q4 GDP is about to have its “lights out moment.” Either that, or if Q4 GDP “mysteriously does not collapse, then scapegoating the weather for what was a fundamental flaw with the economy (and subsequent definitional revisions to GDP were the primary source of ‘economic growth’ in 2014), will be just that.”

In a recent Inquisitr article, forecasters accurately predicted the current unseasonably cold weather that many parts of the U.S. are now experiencing. Now that Black Friday is less than two weeks away, it is highly probable that the second Polar Vortex may keep many holiday shoppers at home, stealing Christmas profits this year.

[Image via DNamto]


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