Okay, so I don’t guess many people would look to the Daily Mail for reliable economic analysis, but this particular form of breathless hype (I guess now that they don’t have the impending doom of the “Category 4 storm menaces New York,” which was utter B.S. too) annoys me, and can’t be on point, can it?
Specifically, the article bangs on about retailers losing out on the precious back-to-school market. Fair enough – a lot of sales got lost. But here’s the thing (apart from the minor fact that Google just told me that school doesn’t start in New York State until next Wednesday, leaving a whole additional week/holiday weekend to get the shopping in) – where in the Hell do they get off with the implication/assumption that, what, school won’t start, or parents just won’t buy their kids school supplies or new clothes this year? The back to school thing is a particularly stupid example because it’s one form of not-really-discretionary purchase that probably gets displaced, at most by a few days or a week or two, dollar for dollar, but is not in any meaningful sense “lost.”
Yeah, a couple of days revenue shutdown will lead to some permanent losses for the year – a certain number of Broadway shows or restaurant reservations won’t ever be re-scheduled, but many (and the baseball games, and the retail sales) will be.
This is a variant on another stupid theory I heard voiced before the storm, that it would be an economic stimulus by spurring people to purchase emergency supplies. Maybe Home Depot sold a couple million dollars worth of duct tape and plywood that would otherwise never have been purchased, but again, many of the purchases were fungible, and the emergency food, water, etc. that were bought will be consumed over time (in the process displacing/reducing future sales somewhat).
Am I missing something, or is this type of economic impact analysis just deeply flawed? It’s not, I guess, the first instance of the media making crap up to hype a story . . .
However, I think they do have some sort of calculation based on known factors such as how many businesses, what they sell, how much they make, and how long they’re out of commission, then make a guesstimate based on that. But I have about as much faith in that as I do BCS ratings.
Panic sells. The media and the government love things like hurricanes. It gives them a reason (especially the media) to go over the top and panic. I really thing that it is self serving, they predict and promote the panic, then you tune into them to keep updated on the situation that wasn’t ever going to be as bad as they predicted.
While there is a certain amount of hype, there is also a kernel of truth.
While some of the lost spending is not-really-discretionary spending such as school supplies or clothing, those sales will occur in places NOT flooded out, storm damaged, or lacking in electricity. Families will leave the storm damaged area to get these supplies, so even though a local store maybe standing if it is not open for the next week it will lose sales to places up the road. Even chain stores are reliant on local sales to remain open. The parent company might look at a place that was on the edge and decide that the repair costs or higher insurance premiums aren’t worth it and shutter the store. Which says nothing of non-chain stores that can not weather the hit, or the employees of any type of store that can not afford to miss work for long.
Beyond that, the not-really-discretionary spending is in the face of a natural disaster actually discretionary spending. Instead of two new pairs of jeans for each kid, they only get one or none. Instead of buying new, we go to second hand clothing stores. The kids just go without certain school supplies this year.
So is the economic impact analysis in the Daily Mail deeply flawed? Don’t know, ain’t going to click through to that site. They might have based their analysis on solid data or pulled it straight out of their butt. However, I don’t think the objections raised necessarily doom such an analysis, they are questions to ask when looking at the data when doing the analysis. The real question is: Do you trust the person or organization making the analysis? I have no problem in seeing millions and tens of millions with economic impact, but then again a million ain’t what it used to be.
All the numbers I’ve been hearing are about actual damage, not lost sales. It is not surprising they use these, it is maybe the only way to compare the impact of various disasters.
As for lost sales, that isn’t computed only for hurricanes. Typically monthly retail sales can be affected also if a section of the country has an unusual amount of snow or something. So this isn’t something done just to sell papers.
I don’t know about this. How many people who bought generators before the storm (and they all sold) would ever have bought them before, or will ever use them again? My kid who lives in NJ went to buy a battery radio, and found they were mostly sold out. Around here the fans go during a heat wave, since lots of people don’t have a/c.
I believe I’ve read that WalMart has very good models of what people buy before a predicted disaster, and stocks accordingly.