CNN is joining the chorus of those seeing an uptick in weather distorted data. They pointed to upticks in housing starts, and new and existing home sales in February as evidence the economy is turning around. We all want to see the economy turn around, but the weather is not going to doing it for us. Let's look at the numbers. The number that drew the most attention was the big 22.2 percent jump in starts from January to February. That is impressive, except that the February number was only 4.5 percent above the December number. Furthermore, all of the increase was in starts in multi-family units. Starts of single family units were down 9.4 percent from their December level. Looking more closely, we see that permits were up by 3.0 percent in February, exactly offsetting the decline in January. In other words, houses that were not started in January due to the weather were instead started in February. The January downturn was due to the weather and the February uptick was therefore an artifact of weather. We get the same picture with the other series. Existing home sales were up 4.6 percent in February, but still down 0.4 percent from December. New home sales were up 4.7 percent from January, but were down by 9.7 percent from the December level. The basic story is that January was a very bad month in part because of worse than usual weather. February looks good both because the weather was not bad relative to what is normal for the month and also because activity that was delayed because of weather in January instead took place in February. This false optimism will likely be wiped out by the March jobs report that will be released on Friday. Reporters should try to find experts that know about the weather.
--Dean Baker
