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It's not just that "items get delivered a bit late". Harsh winter weather STOPS outside construction - which costs construction firms MONEY. If they are making payments on their trucks and equipment they still have to pay the same amount of money, but their INCOME is down by however many days the weather shut down construction. Harsh winter weather DESTROYS crops like oranges in normally mild places. The farmer still has to pay his bills but his REVENUE drops. That impacts the GDP.
Secondly "TIME IS MONEY" - and the GDP is the measure of MONEY. Even if something is only DELAYED it has costs and/or lost revenue associated with it - especially today when so many businesses use "just in time" inventory methods. "Just in time" inventory methods save companies tons of money WHEN THEY WORK SMOOTHLY because those firms using it don't to bear the cost of maintaining extra inventory (they don't need as much warehouse space, they don't need as many warehouse workets etc), but "just in time" inventory methods REQUIRE timely delivery because if you HAVE NO PRODUCT you CAN'T DO BUSINESS. A delivery truck that is down for 2 days because it needs a part costs the delivery company TWO DAYS worth of business. That's TWO DAYS worth of deliveries the company WILL NEVER GET BACK. It's not like when the weather improves that truck can magically create two additional days. If a delivery company delivers 365 days a year (as many trucking companies do) it can't simply create extra days of the year. That revenue is LOST FOREVER. Likewise the company AWAITING those deliveries lose business as well. Sometimes that business may only be delayed, sometimes the customer awaiting the delivery just doesn't end up buying the product at all.
Ken
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or over a given period of time.
(although with our new value scheme I wonder if the official definition will be changed)
The new GDP forecast for the year is a measely 1 percent. And that's assuming there is no additional downturn.
While a harsh winter is to blame for some of it, the underlying foundation of our economy is still very weak. A harsh winter should never cause GDP to go negative.
Harsh winter? I hear there is global warming everywhere. I guess some can have it both ways.
I'm sure Obama has some new job killing EPA regulations coming out this year that will further stifle the economy, and his other policies will weaken the US dollar even more, so yeah, it will downturn, and our the cost of living will increase.
That could spur a boom in solar panels and wood stoves.
The ROI just might start looking good and cords of wood are still cheap.
Well when folks start dying of lead poisoning the sheet will hit the fan. Wood will then become more expensive and the greenies will scream to save the tree's once again.
Well when folks start dying of lead poisoning the sheet will hit the fan. Wood will then become more expensive and the greenies will scream to save the tree's once again.
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a year, or over a given period of time.
(although with our new value scheme I wonder if the official definition will be changed)
M1 and M2 is the measure of money.
True enough, but you're nitpicking. You're smart enough to know what I meant. Time is money, and when economy activity doesn't take place because of adverse weather, the economy suffers - less money is made and the GDP drops from what it would be otherwise.
True enough, but you're nitpicking. You're smart enough to know what I meant. Time is money, and when economy activity doesn't take place because of adverse weather, the economy suffers - less money is made and the GDP drops from what it would be otherwise.
Ken
Second quarter numbers are out:
"The U.S. economy roared back in the second quarter of 2014, growing at an annualized rate of 4 percent. The good news came after a dismal first quarter report that saw it shrink by 2.1 percent.
... The strong quarter also solidified the belief among experts that the first quarter's dip was a one-off event, mostly the result of terrible winter weather."
"The U.S. economy roared back in the second quarter of 2014, growing at an annualized rate of 4 percent. The good news came after a dismal first quarter report that saw it shrink by 2.1 percent.
... The strong quarter also solidified the belief among experts that the first quarter's dip was a one-off event, mostly the result of terrible winter weather."
Yup, and no doubt part of the reason it was so high last quarter was that some of that economic activity that should have taken place in the 1st quarter ended up being slid to the 2nd quarter when the weather was much improved. Some of that missed economic activity is simply lost forever however - with the time being past and the opportunity gone.
Ken
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