Economic Tidbits


It’s March 4—it’s -5 degrees. The wind chill is -20 degrees. And, there’s a foot of snow on the ground. Frigid temperatures, abundant snow, and gale-force winds have been annoyingly common in Nebraska this winter. This year’s winter weather has been aggravating, and these aggravations can manifest themselves in the economy. Construction and housing, due to the outside nature of the business, are the most affected by the frigid, snowy weather. But, the transportation, manufacturing, hospitality, and retail sectors can also be impacted because of travel interruptions and delays in shipping goods and parts. Automobile body shops see more customers resulting from accidents on slick streets. Yet, car insurance companies probably pay more indemnities than they had expected when setting premiums.

Economic studies have shown winter weather can slow economic growth and the weather influences are both “supply” and “demand” driven. Cold, snowy weather can cause production slowdowns and mean less customers as consumers elect to stay within the warm confines of home. Unemployment levels tick higher with cold weather, and housing starts and construction permits tick downward. The studies also have shown, though, the effects to the overall economy to be short-lived. Once warmer weather returns, hiring, construction activity, and housing starts pick up and offset the slowdown.

For agriculture, the economic impacts of winter weather can be both short and long term. The most immediate economic impacts are felt in the livestock sector. Livestock still need to be fed, and water sources kept free of ice. Feed costs increase as more energy is expended by the animal fighting the weather. The rate of gain for cattle in feedlots will decline, meaning the animals must be fed for a longer period. For confined operations, producers face higher heating costs. Keeping equipment operating in the frigid temperatures can also be a challenge. These all mean increased costs. On the crop side, the extreme cold can damage winter wheat crop unless there’s adequate snow cover to protect it, but the impacts won’t be known until closer to harvest. Extreme cold can also help control insects resulting in less insect pressure on crops. Frigid weather can also help with soil compaction as the soil freezes and thaws breaking up the soil.

All in all, winter weather does cause economic disruptions. For agriculture, unlike much of the rest of the economy, these effects can be both immediate and long-term.

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