Record warm Minnesota weather could heat economyby Julie Siple, Minnesota Public Radio
St. Paul, Minn. — Take a look outside, and you might think it's May. People are jogging around lakes. Kids are eating Dilly Bars outside Dairy Queens.
There has been some sunny economic news recently, as well. Nationally, retail sales posted their biggest gain in February since last September. That has some economists asking: Could the warm weather be good for the economy?
Temperatures could climb into the 60s in the north this weekend, perhaps even touching 70 degrees. And if we hit 70 degrees four more times this month in the Twin Cities, it will tie 1910 for the most 70-degree days ever recorded in March.
The economic effect of 70 degrees in March can be seen at the Freewheel Bike shop in Minneapolis. Mechanics work at a dizzying pace to tune up old bikes while a stream of customers check out the shiny new ones.
When the sun comes out, customers do too, said Stephen Cottrell, the store's sales manager.
"It's like a light switch. All of a sudden, we go from maybe a door count of 40 customers to 450 customers," Cottrell said.
That happened last Saturday, and it has been busy ever since. Cottrell credits a stronger economy for sure, but says the warm weather helps. He expects sales will be up 15 to 20 percent over last March, when bad weather hurt sales.
"This year, already, it's like, 'I'll take the new bottle cage, I'll take the new pedals. I'm gonna get the lights,' " Cottrell said "People will still buy the bike. But now all of a sudden they're willing to spend even a little bit more."
The persistent warm streak has also been a welcome change for the construction industry, the hardest hit sector in the economic downturn.
Roofers, for example, are much busier than usual this March, said Scott Hartman, production manager at Sela, a Twin Cities-based construction company. He hopes that will mean the company can take on more jobs this season.
"With a start like this, if we don't get snowed in or the weather doesn't turn here in a week or two, it could make for a pretty long, nice season," Hartman said.
But there's no guarantee a longer season means more jobs or more money, he said.
The warm weather may improve the outlook for construction and sales for bike shops but it doesn't benefit industries across the board.
Some Minnesota businesses were hurt by the mild winter — ski shops, for example. And even some sectors that are doing well say the weather isn't a major factor. Last month, auto sales nationally reached their fastest pace in four years.
Earlier this week at Walser Toyota in Bloomington, the sales floor was full of customers negotiating new wheels.
Sales this month are on track to be at least 15 percent higher than last March, said Doug Sprinthall, who oversees new car sales for the Walser automotive group. But Sprintahall is reluctant to give the weather too much credit.
"It does help. It's really hard to gauge how much affect the weather has. I would probably right now put it at the bottom of the list," he said.
Below, for example, the annual March auto show, and definitely below the stronger economy, he said.
"I really think that it's how confident people are in being able to afford monthly payments and purchases," Sprinthall said. He is, however, glad this is happening in March.
"This is actually perfect for car dealers because it's a little too early to do yard work. When we have these 70- and 80-degree Saturdays in May, it gets a little tranquil around the dealership," Sprinthall said.
It's difficult to measure the net effect of a warm streak on the economy, but Tom Stinson, Minnesota's state economist, was willing to give it a try. The warm weather creates winners and losers, he said, but overall he thinks it helps the state economy.
"I think that people with nice weather are a little more optimistic, and so they may spend just a little bit more," Stinson said. "If you spend just a little bit more, that, of course, provides just a little bit more money into the system that turns around and is available for other people to spend as well."
One of the larger questions looming is whether the weather is just stealing sales from later in the year.
"The best answer to that question is that we don't know for sure ahead of time," Stinson said.
- Morning Edition, 03/16/2012, 6:50 a.m.