It's Been A Lot Colder In The US And Canada Than In Japan, Europe, And The UK This Winter

Unseasonally harsh winter weather in the United States has caused disruption to economic activity and has many wondering to what extent the recent downturn in economic data surprises is reflective of transitory weather-related factors.

A similar story has been playing out to the north as well - it's been unusually cold up there, and Canadian economic data surprises have also taken a turn for the worse.

In a report discussing the effects of recent weather conditions on economic activity, Goldman Sachs economist David Mericle looks at the regional angle.

"As a cross-check on the importance of adverse weather this winter, we can look at the cross-country link between temperature anomalies and data surprises," writes Mericle in the report.

"Exhibit 3 compares changes in our regional MAP indexes with the cumulative deviation of heating degree days from seasonal norms since November. While only suggestive, the chart shows that the U.S. and Canada have had the coldest winters and the largest downside surprises."

The report estimates that a bit more than half of the recent slowdown in U.S. economic activity is due to weather.

"In terms of GDP growth, we expect a Q4 hit of -0.2 percentage points, a Q1 hit of about -0.5 percentage points, and a Q2 boost of 0.5-0.75 percentage points," says Mericle.