Thursday, February 27, 2014

BBC News - Brazil's economy grows at twice the rate expected

Brazil's economy unexpectedly notched up a growth rate of 0.7% in the last quarter of last year.
Finance Minister Guido Mantega told reporters: "It was a surprise even for the government."
The economy shrank in the third quarter of 2013. Many economists had expected it to shrink again and fall into recession.
Over the whole year it has grown by 2.3%, helped by strong consumer spending and investment.
But growth in agriculture was flat and industry shrank by 0.2% in the last quarter.
The figures offer some support for President Dilma Rousseff as she tries to woo investors before she stands for re-election in October.
The fact that there was a 6.3% jump in investment will help her persuade businesses that confidence is returning.
The government has also promised to cut $18.5bn (£11.1bn) in public spending to bring its deficit under control.
Inflation
The Central Bank put interest rates up on Wednesday to 10.75% - the same level they were at when President Rousseff took office in 2011.
Inflation has fallen back to 5.6% after peaking at 6.7% in June.
The cutting of interest rates early on in her tenure helped growth but caused inflation and a fall in the currency. Since 2011 the Brazilian currency, the real, has fallen from 1.70 to the dollar to 2.35.
Protesters in BrazilProtesters have marched against public bus fare increases in Brazil
The decline in Brazil's fortunes, the fall off in public services, continuing corruption and what is seen as excessive spending on the World Cup has brought protesters out on to the streets over the last year.
The economy rode a commodity boom under former President Luiz Inacio Lula da Silva, growing on average 4%. In 2010, growth peaked at over 7%.
But it became over-dependent on the Chinese market with exports to China growing at roughly four times the rate of total exports between 2000 and 2010.
Chinese imports of soy, for example, represent over 40% of Brazil's exports.
As Chinese demand fell away, Brazilian growth stuttered, weighed down by poor infrastructure, high consumer debt and sagging business confidence.

Wednesday, February 26, 2014

Bloomberg News - Hong Kong Eyes Fastest Growth in 3 Years as Fed Tapers

Photographer: Brent Lewin/Bloomberg
A chef prepares food inside a restaurant in the North Point area of Hong Kong.
Hong Kong’s economy is set to expand at the fastest pace in three years, even as the winding back of U.S. monetary stimulus adds to the risk of volatility in capital flows, the government said.
Growth may be between 3 percent and 4 percent, Financial Secretary John Tsangsaid in his budget speech today, after a 2.9 percent expansion in 2013. Gross domestic product rose 1.1 percent in the fourth quarter from the previous three months, the fastest pace in a year and matching the median estimate in a Bloomberg News survey of economists.
While Hong Kong also faces the risks associated with a slowdown in China, Tsang has indicated that it’s time to shift away from a crisis mentality and to focus more on longer-term policies. In the budget for the coming year, one-off assistance for citizens such as tax cuts and welfare payments totaled about HK$20 billion ($2.6 billion) down from HK$33 billion in the previous document.
“The growth forecast of 3 percent to 4 percent is achievable due to a robust domestic demand and a pick-up in investment,” said Ryan Lam, Hong Kong-based economist at Hang Seng Bank Ltd.
Hong Kong’s economy grew 1.5 percent in 2012, down from the 4.8 percent pace in 2011 and a 6.8 percent expansion in 2010, when the city was surging back from the global financial crisis,Bloomberg data show.
Today’s package included one-off measures such as property-rates waivers, tax cuts and social-security payments.

Fed Tapering

The U.S. Fed Reserve said in December that it would start reducing the monthly pace of its asset purchases, citing progress toward its goal of full employment. It announced a $10 billion reduction that month, followed by a cut of the same size in January, to $65 billion. Fed Chair Janet Yellen this month pledged to scale back stimulus in “measured steps.”
While Tsang today described the Chinese economy as “robust,” investors are focused on credit-market stresses including the risk of defaults by high-yield trust products. Hong Kong’s Hang Seng Index (HSI) has fallen about 4 percent this year, amid concern that China’s slowdown will deepen. The gauge was up 0.2 percent today as of the morning break in trading.
“The slowdown in China’s growth will impact Hong Kong’s economy,” Lily Lo, a Hong Kong-based economist at DBS Group Holdings Ltd, said before today’s data and budget speech.
Barring external shocks, Hong Kong can maintain full employment this year, Tsang said, adding that tourism and infrastructure projects will help to fuel domestic consumption.

Disneyland Project

Hong Kong Disneyland plans to open its third and largest hotel in the city by early 2017, the company said this month. Visitors arrivals to Hong Kong from China jumped about 17 percent to 40.8 million last year, according to the Hong Kong Tourism Board. China is the destination for more than half of the city’s exports of goods and the source of 75 percent of tourist arrivals.
The financial secretary noted that this year’s forecast economic growth is lower than the 4.5 percent average of the past decade. The housing market is also yet to “regain its balance” after lowinterest rates and abundant liquidity fueled asset-bubble risks, he said. Property sales slumped after the government introduced tougher curbs last year.
Hong Kong’s annual economic growth may be 3.5 percent from 2015 through 2018, Tsang said.
A “structural China slowdown” will likely damp Hong Kong’s recovery, Bank of America Corp. said in a note ahead of today’s data and budget speech. The city’s economy remains “highly sensitive” to Fed tapering and property-market volatility poses a threat to financial stability, the bank said.
The International Monetary Fund projects global growth of 3.7 percent this year, up from 3 percent in 2013. At the same time, China’s economic expansion is set to slow this year to 7.5 percent, the least since 1990, according to a Bloomberg News survey of economists.
To contact the reporter on this story: Rachel Butt in Hong Kong at rbutt4@bloomberg.net

Tuesday, February 25, 2014

BBC News - Which country has the highest tax rate?

In which countries do high earners pay the most tax? And where do average earners pay the most?
Income tax has been a political hot potato for decades.
In 1966 The Beatles released their song Taxman as a protest against the 95% "supertax" rate introduced by Harold Wilson's Labour government, which the band had to pay. The top rate of tax in the UK is less than half that now but it's still a source of controversy.
In France, President Francois Hollande's election campaign promise to tax salaries above one million euros (£830,000) at 75% was - not surprisingly - met with howls of protest by the rich, who Hollande once said he "didn't like". His policy was struck down by the courts in 2012 who ruled it unconstitutional but he amended it so that the employer became liable to pay it.
To put this in context, the football club Paris Saint-Germain have to pay nearly 35m euros (£29m) to the government on star striker Zlatan Ibrahimovic's net annual salary of 11m euros.
Ibrahimovic30,000 euros... not bad for a day's work
Tax rates do vary dramatically depending on which country you live in. The accountancy firm Price Waterhouse Coopers (PWC) has crunched the numbers for the G20 nations.
For each country, they calculated how much a high earner on a salary of $400,000 (£240,000) in 2013, with a mortgage of $1.2m (£750,000), would have left after all income tax rates and social security contributions. They assume this person is married with two children, one of them aged under six.
These are their findings. In each country, the wage earner takes home the following proportion of his or her salary.
  • Italy - 50.59% (takes home $202,360 out of $400,000 salary)
  • India - 54.90%
  • United Kingdom - 57.28%
  • France - 58.10%
  • Canada - 58.13%
  • Japan - 58.68%
  • Australia - 59.30%
  • United States - 60.45% (based on New York state tax)
  • Germany - 60.61%
  • South Africa - 61.78%
  • China - 62.05%
  • Argentina - 64.02%
  • Turkey - 64.64%
  • South Korea - 65.75%
  • Indonesia - 69.78%
  • Mexico - 70.60%
  • Brazil - 73.32%
  • Russia - 87%
  • Saudi Arabia - 96.86% (so you take home $387,400 out of the $400,000 salary)
In most of these 19 rich countries (the 20th member is the EU) the take-home pay is between $230,000 - $280,000.
But one important thing to consider when comparing the top rate levels of tax is the threshold where the rate kicks in, because the differences are massive.
"In the UK, the 45% top rate of tax kicks in at an income level of around $250,000 (£151,000) compared to Italy where the top rate of 43% comes in at $125,000," says Ben Wilkins, a tax partner at PWC.
Outside the G20, the Danish government taxes workers at 60% on all earnings over $60,000.
Most of us can only dream of earning a salary that would attract the top rate of tax, so what about ordinary earners?
It is difficult to compare tax rates. Income tax is only one tax - most of us will pay other kinds of tax, like social security, and those with children might get some tax relief.
The statisticians at the Organisation for Economic Cooperation and Development (OECD) have done some analysis of average salaries.
"At the top end of the distribution we have Belgium where single people pay 43% of earnings in income tax and social security contributions (or national insurance), followed by Germany with 39.9%," says Maurice Nettley, head of tax statistics at the OECD. "The lowest rates are paid in Chile at 7% and Mexico at 9.5%."
These tax rates apply to single people with no children, on an average salary for their country.
  • Belgium - 42.80%
  • Germany - 39.90%
  • Denmark - 38.90%
  • Hungary - 35%
  • Austria - 34%
  • Greece - 25.4%
  • OECD Average - 25.10%
  • UK - 24.90%
  • USA - 22.70%
  • New Zealand - 16.40%
  • Israel - 15.50%
  • Korea - 13%
  • Mexico - 9.50%
  • Chile - 7%
The following tax rates apply to married couples with two children.
  • Denmark - 34.8%
  • Austria - 31.9%
  • Belgium - 31.8%
  • Finland - 29.4%
  • Netherlands - 28.7%
  • Greece 26.7%
  • UK - 24.9%
  • Germany - 21.3%
  • OECD average - 19.6%
  • USA - 10.4%
  • Korea - 10.2%
  • Slovak Republic - 10%
  • Mexico - 9.5%
  • Chile - 7%
  • Czech Republic - 5.6%
In Germany the rate drops from 39.9% to 21.3% because of generous child tax credits. Across the OECD, tax rates drop by an average of 5.5% for married couples with children. Greece is the only country where you pay more tax if you are married with children.
Of course, the point of paying taxes is that the government is supposed to provide services for that.
"In a lot of the European countries tax rates and social security contributions are high but the provision of benefits by the state tends to be very generous compared to countries in other parts of the world," says Nettley.
"If you fall ill or become unemployed the state will contribute and there are also generous pension arrangements."

Monday, February 24, 2014

BBC News - G20 meeting targets an additional 2% economic growth

Financial leaders from the 20 biggest economies have set a goal of generating $2 trillion (£1.2 trillion) in extra output over the next five years.
Meeting of G20 finance ministers and bankers
The meeting brought together leading finance ministers and bankers
During that period they aim to boost the gross domestic product of G20 countries by 2% above the levels currently expected.
It is hoped the move will create tens of million of new jobs.
The goal was announced at the Group of 20 weekend meeting in Sydney. The main G20 meeting is in Brisbane in November.
'Unprecedented'
US Treasury Secretary Jacob Lew said the agreement was essential for "turning the next page'' in the global economic recovery.
"G20 members have spoken clearly: boosting growth and demand tops the global economic agenda," he said in a statement.
And Australian Treasurer Joe Hockey heralded the announcement from finance ministers and central bankers as being "unprecedented".
He added: "We are putting a number to it for the first time - putting a real number to what we are trying to achieve."
The communiqué from the group, which represents about 85% of the global economy, also said they would take concrete action to increase investment and employment.
The G20 major industrialised nations include the US as well as emerging economies such as Saudi Arabia and China.
Each country will now present a detailed growth strategy to the G20 November summit.
Tax issues
Another topic discussed at this weekend's meeting was the need to develop stricter rules on cross-border taxation.
Profit shifting by firms away from high tax nations to lower taxation regimes has sparked public and political fury in the UK and US.
Firms in the spotlight have included Starbucks, Google, Apple and Amazon.
The G20 has now come up with a set of common standards for sharing bank account information across borders.
An automatic exchange of information among G20 members will take effect by the end of 2015.
"Some multinational companies aren't paying their fair share of tax anywhere," said Australian Finance Minister Joe Hockey. "We want a global response."

Thursday, February 20, 2014

Reuters News - World economic recovery struggling to gain traction

(Reuters) - China's vast factory sector contracted again this month and the expected acceleration in euro zone business activity failed to materialize, highlighting the fragile state of a global economy.
A survey out of China reinforced concerns of a minor slowdown in the world's second biggest economy while a sister index underscored an ongoing divergence between France, the bloc's second biggest economy, and the rest of the 18-member currency union.
"The euro zone is most at risk of a global demand shock given the chills emanating from China's deleveraging across emerging markets, North America's current 'frozen' growth patch and the fact that the U.S. is exporting less of its growth to the rest of the world," said Lena Komileva at G+ Economics.
Figures due later on Thursday from the United States are expected to show a marked easing of the pace of growth in its manufacturing industry.
The flash Chinese Markit/HSBC PMI fell to a seven-month low of 48.3 in February from January's 49.5, although some analysts cautioned against reading too much into the report, noting it was a shorter-than-usual snapshot.
Anything below 50 indicates a contraction.
"Today's poor PMI numbers add to the raft of survey and activity data showing that growth momentum in China is clearly slowing after having peaked last summer," said Nikolaus Keis at UniCredit.
"However, one should not read too much into a single number that may have been additionally depressed by the Lunar New Year holidays."
After the earlier disappointing surveys from China the yen, which often gains in line with investors' aversion to risk, got a leg up against its rivals but markets were little moved after European figures.
FLAGGING FRANCE
Markit's Eurozone Composite PMI, which is based on surveys of thousands of companies and is seen as a good guide to growth, dipped to 52.7, just below January's 31-month high of 52.9.
That missed expectations in a Reuters poll for a modest rise to 53.1 but marked the eighth month the index has been above the 50 level.
"The story behind the euro zone PMIs remains one of an increasingly fragile recovery under way amid growing divergence between the union's largest economies, global growth headwinds and persistent euro strength," Komileva said.
The overall index masked news France is lagging far behind its European peers, pouring cold water on hopes for a recovery gathering momentum in the country after it expanded 0.3 percent in the fourth quarter.
"All in all, it remains to be seen if the first quarter of 2014 will confirm the beginning of the French recovery or of a longer period of stagnation," said Julien Manceaux at ING.
Still, Markit said the latest data point to 0.5 percent economic growth in the bloc this quarter, stronger than the 0.3 percent predicted in a Reuters poll published last week.
But while the recovery across the euro zone appears fairly broad-based, with growth across private industry near 2-1/2 year highs, firms cut prices again to drum up trade, which may further stoke fears of deflation in the bloc.
A composite prices charged index showed firms have cut prices every month for nearly two years, suggesting inflation is not going up anytime soon.
Inflation dropped unexpectedly to just 0.7 percent across the euro zone in January, official data showed last month, well below the European Central Bank's 2 percent target ceiling.
Falling inflation has increased pressure on the ECB to consider fresh policy measures to counter deflation risks and support a fragile recovery that appears to be running out of steam.
But with few options available, having already slashed its main interest rate to near zero and given more than 1 trillion euros of cheap cash to banks for a three-year period, the ECB held policy steady when it met earlier this month.

(Editing by Alison Williams)

Wednesday, February 19, 2014

BBC News - Scottish government to receive powers to issue finance bonds

The Scottish government is to be given the power to issue its own bonds, the UK government has confirmed.
London Stock ExchangeUK ministers said the Scottish government wanted direct access to capital markets
The move will give the Holyrood administration an additional source of financing when borrowing powers are implemented from 2015.
Chancellor George Osborne called it "a historic day for Scotland".
But the Scottish government described it as "nothing new", and said only independence would give Scotland full control of its economy and finances.
Under the Scotland Act 2012, the Scottish government will be able to borrow up to £2.2bn for major capital projects such as transport infrastructure, hospitals and schools.
The act, which implemented many of the recommendations of the Calman Commission on Scottish Devolution, will come into force in 2015 and will allow the Scottish government to borrow through the UK's National Loans Fund and commercial banks.
In addition to the new borrowing powers, the Scottish government will also be able to set a Scottish income tax rate.
The UK government consulted on whether these powers should be extended to allow bond issuance, as part of the total £2.2bn borrowing limit.
It said adding the power to issue bonds would give Holyrood the ability to directly access capital markets, which it claimed Scottish ministers had requested.
Bonds enable the borrower to obtain funds from an investor for a fixed period of time for a pre-determined interest rate.
However, Treasury analysis has suggested that issuing bonds is likely to be more expensive for Scotland than accessing the National Loans Fund.
The majority of respondents to the Treasury's consultation said they believed that "bonds issued by the Scottish government would likely translate into a cost of borrowing significantly above that enjoyed by the UK government."
The consultation, which sought views from the Scottish government and investors about Scottish bonds, said Scotland might have to pay between 0.3% and 1.2% more than the British government to borrow from financial markets.
Existing funding arrangements charge Scotland only about 0.2% extra.
Chief Secretary to the Treasury Danny Alexander said: "This is a historic announcement, demonstrating once again how Scotland can grow and prosper within the UK.
"From 2015, Scotland will be able to borrow up to £2.2bn to invest in its hospitals, roads and other capital projects. In addition to having access to the National Loans Fund, our decision today means that the Scottish government can directly issue its own debt.
"It will of course be up to the Scottish government to manage their borrowing, but this is complemented by the tax powers in the Scotland Act providing the Scottish government with an independent source of revenue to support borrowing costs."
Mr Osborne said: "Being able to issue its own bonds gives Scotland new powers and new responsibility, within the security of the UK.
"Alongside the considerable new tax and spending powers we have already given in the Scotland Act, it is further evidence of why being part of the UK gives Scotland the best of both worlds."
But a spokesman for the Scottish government responded: "This is nothing new and was promised as part of the Scotland Bill in 2012.
"Instead of having the powers to borrow that were needed during the recession the UK government is instead responsible for 26% cuts in capital spending.
"This is simply too little too late. Without the full fiscal powers of independence the ability of any Scottish government to borrow to boost investment in infrastructure will continue to be constrained by arbitrary limits imposed from outside Scotland.
"Under independence, we would take our own decisions on public finances that are best suited to Scottish circumstances and priorities."

Tuesday, February 18, 2014

Bloomberg News - Hedge Fund Net Inflows May Triple This Year, Deutsche Bank Says

Investors may almost triple the amount of capital they put into hedge funds this year, boosting industry assets to a record, an annual survey by Deutsche Bank AG (DBK) showed.
Hedge funds may attract $171 billion of net inflows and generate $191 billion in performance-related gains, according to 413 investors globally with $1.8 trillion of industry assets polled by the German bank in December. The combined effect will help boost assets by 14 percent to $3 trillion by year-end, the survey showed. Last year, the industry drew $63.7 billion of net deposits, according to Hedge Fund Research Inc.
The increase in allocations predicted would be the largest into hedge funds since 2007, based on data from Chicago-based HFR. The optimism follows the best industry return in three years and the growing trend of investors folding hedge funds into their stock or fixed-income allocations, the survey said.
“With the majority of investors happy with hedge-fund performance, we expect institutional investors to further strengthen their commitment to hedge funds,” Anita Nemes, global head of the Deutsche Bank’s hedge-fund capital group, said in an e-mailed statement.
Eighty percent of investors in this year’s survey said hedge funds met or exceeded theirperformance expectations for 2013. Their hedge-fund investments returned 9.3 percent on a weighted-average basis last year, beating the 9.2 percent target in the previous year’s survey.

Rising Allocations

Global hedge funds had $2.6 trillion in 2013, according to HFR. Investors in the Deutsche Bank survey are targeting a 9.4 percent return for this year.
Forty-seven percent of the investors increased their hedge-fund assets in 2013, while 62 percent plan to do so this year, according to the survey. Investors have diversified holdings to weather the low-yielding and uncertain market environment after the 2008 global financial crisis, it said.
Thirty-nine percent of the investors in the survey now allocate to stock-focused hedge funds as part of their equity investments and credit-focused strategies as part of fixed-income holdings, the survey showed. That was a 14 percentage point increase from last year’s survey.
“This means investors are effectively removing percentage allocation constraints to hedge-fund strategies, enabling significant growth potential for alternatives within their portfolios,” Angharad Fitzwilliams, Hong Kong-based director of Deutsche Bank’s hedge-fund capital group, said in an e-mail.

Pensions, Endowments

The percentage of investors holding hedge-fund assets in a separate “alternatives” bucket fell to 50 percent from 56 percent last year, according to the survey.
Institutions such as pensions, endowments, foundations and insurers now account for two-thirds of industry assets, rising from a third before the 2008 crisis, it showed. Almost half of the institutions in the survey increased allocations to hedge funds last year and 57 percent plan to expand such assets in 2014, according to the survey.
Funds betting on rising and falling stocks and those that seek to profit from corporate events such as mergers are the most sought after strategies this year, with more than 50 percent of investors indicating they would add to such funds, according to the survey. Global macro, a strategy that seeks to profit from economic trends, ranked third.

Stock Pickers

“With the end of quantitative easing and an unexpected increase in volatility and dispersion, 2014 may prove to be more of a stock picker’s market,” Fitzwilliams said. “Investors believe economic fundamentals, as opposed to political rhetoric, are going to have a greater influence on global asset prices over the next 12 months.”
Regionally, 29 percent of all investors in the survey plan to increase allocations to Japan this year, trailing only Western Europe and ahead of North America.
Europe’s largest investment bank by revenue started the annual survey in 2002. The latest edition polled investors including pensions, endowments, investment consultants, funds of funds, family offices and private banks.
To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

Monday, February 17, 2014

Reuters News - Eurozone regulators gather for detail on bank review plans

File photo of sculpture showing the Euro currency sign in front of the European Central Bank (ECB) headquarters in Frankfurt February 29, 2012. REUTERS/Alex Domanski/Files
1 OF 2. File photo of sculpture showing the Euro currency sign in front of the European Central Bank (ECB) headquarters in Frankfurt February 29, 2012.
(Reuters) - The eurozone's banks are about to get greater insight into the European Central Bank's landmark review of their books, as national experts and their advisers meet in Frankfurt on Monday to hammer down details of the next phase of the tests.
The ECB is carrying out a wide-ranging review of 128 of the region's largest banks in an effort to address lingering doubts about their health before it becomes their supervisor in November.
Banks have already been asked for extensive amounts of data on their loan books and trading assets for the 'Asset Quality Review' (AQR), but know relatively little about how the ECB will interpret the data and what the methodology of the tests will be.
Three sources familiar with the tests told Reuters that representatives of all 18 eurozone supervisors had been asked by the ECB to the meeting in Frankfurt on Monday to discuss the methodology of the tests and other details of the program's implementation.
Representatives from the big four accounting firms - KPMG, Deloitte, Ernst & Young and PriceWaterhouse Coopers - who are set to earn a fortune from advising on the tests - will also attend, two of the sources said.
"The so-called execution phase, or in technical terms, AQR phase 2, is about to commence," one of the sources said, speaking on condition of anonymity as the discussions are not yet public.
Phase two includes going through loan portfolios individually and inspecting the collateral, as well as reviewing the value of hard-to-value assets known as 'level three' assets. Its execution will give banks some insights into the ECB's approach to valuation.
The three sources said national authorities and some of their advisors have already been given an AQR manual, spanning about 250 pages, on the methodology. Two of the sources said the manual's recipients have been asked to sign confidentiality agreements on its contents.
The ECB declined to comment on the manual or Monday's meetings.
Banks and investors across the eurozone are intensely monitoring the progress of the asset quality review, since it could have a major impact of on the valuation of individual banks and the sector as a whole.
European banks trade at a significant discount to their U.S. peers, something that some policymakers attribute to remaining doubts about whether the banks have acknowledged bad loans or other problems they may be harboring.
Individual banks could be forced to raise capital if they are found to have over-valued their assets, with one estimate suggesting the EU-wide stress tests - which the ECB exercise feeds into - could reveal a billion dollar capital shortfall.

(Reporting by Laura Noonan; Editing by Anthony Barker)

Friday, February 14, 2014

Reuters News - Analysis - Snow blind: winter's wrath obscures views on U.S. economy

A woman uses an umbrella to shelter from snow flurries as she walks along a street in the Manhattan borough of New York February 13, 2014. REUTERS/Zoran Milich
A woman uses an umbrella to shelter from snow flurries as she walks along a street in the Manhattan borough of New York February 13, 2014.
(Reuters) - Interpreting U.S. economic figures in the last couple of months has taken on a familiar pattern: wonder about possible weakness in demand, and then shrug and dismiss it all as a product of bad weather.
Reports from official government agencies, private surveys and U.S. corporations have blamed colder-than-normal weather and heavy snowfall across large swaths of the country for everything from slack retail sales and weak employment data to poor industrial output.
U.S. retail sales were the latest to disappoint, falling unexpectedly in January. In a case of economic kismet, the data was released Thursday right as a fresh snowstorm socked the East Coast, shutting down the federal government and wreaking havoc from Georgia to Maine.
But determining the weather's effect on economic activity is difficult. It's relatively easy to understand how consumers would be less likely to go to stores in a blizzard, but it is less clear why the last two monthly jobs reports both came in below expectations.
Some retailers are more tied to weather than others, but when it comes to corporateearnings there is also a temptation to wonder if companies are overstating the effects of weather to distract from other issues.
The uncertainty makes the job harder for the Federal Reserve, which is trying to reduce its extraordinary bond buying stimulus that has kept a lid on interest rates for several years. It also complicates the picture for investors staring at a U.S. stock market that is just a few percentage points away from all-time highs.
"I can't quantify the degree to which the weather is hampering efforts in assessing the true condition of our economy. It does make me suspicious of anything based on surveys," said Dan Fuss, vice chairman and portfolio manager at Loomis Sayles, which oversees $200 billion in assets.
"You just have to say that you won't get hung up on short-term reports of economic or market data."
Almost every state east of the Mississippi River, along with Texas and certain Plains states, has suffered from colder-than-average weather in the November to January period, according to the National Climatic Data Center, with the Upper Midwest and Ohio Valley experiencing their seventh- and 12th-coldest three months since 1895.
In addition, the entire eastern seaboard and several Midwest states have also seen higher than normal precipitation in that same time period.
"It looks like bad weather has reduced fourth-quarter real GDP by about 0.4 percent and a like amount for the first quarter," said Steven Einhorn, vice chairman at hedge fund Omega Advisors Inc in New York. He said slower growth in those quarters should result in a faster pace of growth in the second quarter.
That view dovetails with forecasts in a Reuters survey released earlier on Thursday showing economists expect U.S. economic growth to recover from around 2.2 percent in the first quarter to 3 percent in the second half of the year.
In Thursday's retail sales report, the weather was seen as a major contributor to the surprising 0.4 percent drop in January.
One of the primary ways winter weather can chill consumption is through higher heating costs. Morgan Stanley on Thursday estimated higher heating bills will cut into household spending by about $34.7 billion, more than usual.
Weakness was indeed notable in furniture sales, department stores and sporting goods stores.
Harder to explain is the 0.6 percent drop in "nonstore retailers," which includes online shopping that should not have been affected by weather patterns, worrying some who think the economy is still performing below-trend.
The same can be said for January and December employment figures, which showed less hiring than expected.
Other recent data is consistent with the idea of a weather-related drag on the economy. The Institute for Supply Management's January manufacturing survey showed supplier deliveries, which would be hit by storms, were slowing. Auto sales were weak in January, and December housing figures were also below recent trends.
The impact of the cold snap has extended far beyond the retail industry. In recent weeks, U.S. companies from Ford Motor Co (F.N) to CSX Corp (CSX.N) to Ingersoll Rand Plc (IR.N) have complained that their operations have been snarled by the long period of severe winter weather and the cascading transportation and logistical problems the snow and subzero temperatures have triggered.
Several Federal Reserve officials, including new chair Janet Yellen, have commented of late that weather seems to have played a factor in some of the surprisingly weak data.
"We've had unseasonably cold temperatures that may be affecting economic activity in the job market and elsewhere," Yellen said on Tuesday during her testimony before the House Financial Services Committee.
Other Fed officials evinced more skepticism.
"I've often wondered if we can do a better job of taking out weather-related aspects of the data so we can look at underlying trends more clearly," said James Bullard, president of the Federal Reserve Bank of St. Louis in New York on Wednesday.
"I'm pretty suspicious that it was the weather. But I admit that I don't have a really good model that will tell me that."
Economists at Deutsche Bank note that certain figures like employee tax receipts, which are growing at a 4.5 percent year-over-year rate, about the same as a year ago, suggest the economy has not downshifted, meaning retail sales and other reports are indeed being affected by seasonal conditions. That would support Einhorn's view that the economy should rebound in the second quarter.
As for the near-term view, some economists have been cutting expected first-quarter growth estimates. BMO Capital Markets in Toronto lowered their first-quarter growth forecast to 1.7 percent after the most recent data, compared with earlier estimates for 2 percent growth.
An analysis by Goldman Sachs in early January found that recent seasons of warmer-than-usual winter should not cause seasonal distortions to be worse by comparison this winter, because weak activity gets magnified by a reduced adjustment factor from warm winters.
Investors meanwhile are left hoping the weakness blows away with the winter wind.
"Folks like me who have studied this are willing to give the economy a whole pass on the first quarter," said Phil Orlando, chief equity strategist at Federated Investors in New York.
"We understand the impact the weather is having and we expect the economy is going to perk up when we get some more seasonal weather in the second quarter."

(Reporting By David Gaffen, Daniel Bases, Herb Lash, Jennifer Ablan and Luciana Lopez in New York and Lucia Mutikani in Washington; Editing by Meredith Mazzilli)