STOCK MARKET WATCH -- Thursday, 1 March 2012

[Demeter]

20. Two-thirds of economists say weather juicing data: $12 billion less in utilities bills

http://www.marketwatch.com/story/two-thirds-of-economists-say-weather-juicing-data-2012-03-01?siteid=YAHOOB

Two-thirds of Wall Street economists say abnormally warm weather is making the U.S. economy look stronger than fundamentals would suggest, according to a survey released Thursday. In a special question to the Blue Chip Financial Forecasts, 66% of those polled responded yes to a question asking “has unseasonably warm and dry winter weather in the U.S. led to an overstatement of the economy’s underlying strength in recent months.” That weather has had an impact on recent economic data is pretty clear after the fourth-warmest January on record in the U.S. Like a crocus in the snow, economic data has bloomed in the winter.

For example, utilities output slumped 7.5% on a seasonally-adjusted year-on-year basis in January as consumers didn’t need to heat their homes as much. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, says utilities usage is down about 10% on an annualized basis this quarter after a 12% drop last quarter. “We would not be surprised to see utility consumption down another $12 billion this quarter or possibly more. No doubt, this will provide a substantial buffer to rising gasoline prices, which is why we do not want to become too pessimistic on first half consumer spending,” he said in a note to clients.

And indeed, the available evidence is that spending has held up even with gasoline prices around $4 a gallon. Though slowing, the three-month average of retail sales in January ran over 6% above the prior-year period...