Archive for September, 2009

Old Farmer’s Almanac Winter Outlook = Stormy?

Wednesday, September 2nd, 2009

Posted by Bill Kirk, CEO

Today the Old Farmer’s Almanac (my personal favorite of all the weather folklore publications) released their Winter Outlook calling for a brutally cold and stormy Midwest again this year.  Hmm.  We disagree.  For a year now, WTI has been projecting a more typical El Nino Winter pattern with the active jet stream split along the Southern tier of the U.S. bringing a lot of rain to the parched Southwest and Texas with the other jet stream well up in Canada with only occasional very cold snaps for the later half of Winter.  This also suggests an active threat for the East Coast for a few Nor’easters with snowfall up 30% to 100% over last year for the major cities from Washington D.C. to Boston, less well inland.  In this case we agree with the Almanac forecast along with the potential for a brutal February and March in terms of late Winter cold and bigger snow events.  Our very high level Winter outlook was published in the May issue of Snow Business Magazine (link below).  Detailed year-ahead forecasts by city with monthly year-ahead snowfall projections are available to clients in www.MYskeye.com.  There is also a cool 1-14 day global snowfall forecast with animated maps available in the website (check out the demo).

http://www.wxtrends.com/content/files/SIMA_Snow_Business_Publication.pdf

The Midwest is typically spared big storms in an El Nino type pattern as they head well South and East of the region making drought more likely by Spring.  After two back-to-back record snowy years, it’s highly unlikely snowfall will be anywhere near those totals in 2009-2010 with a better chance of below average snowfall for cities like Milwaukee.  For what it’s worth, the Almanac did nail the hot/dry weather in South Texas this past year but the severe drought forecast in the Northeast didn’t pan out.  It was actually very wet.   The chart below summarizes the monthly year-ahead forecasts for the Northeast.  I once joked with a very senior executive who planned his billion dollar business on the publication “if the forecast you get is available for $5.99 at Wal-Mart, you might want to rethink that strategy or get the resume polished up!”  It’s great to use it to ”talk about the weather” at family parties, but planning your billion dollar business might present a fair amount of risk!  That said, I buy a copy every year (no, WTI’s forecast does not use the Almanac – see below!) and the Old Farmer’s Almanac is the best of the bunch when it comes to a forecast at least grounded in some science (solar cycles).  Unfortunately the sun is going through one of the longest solar minimum cycles in over a 100 years, almost 300 years and that makes for a challenging method to predict next year’s weather.

old-farmers-almanac-accuracy

August TOP 10 Positives for Retailers

Tuesday, September 1st, 2009

Posted by Bill Kirk, CEO

Retail Industry Same Store Sales results will be announced on Thursday and there are at least 10 positives for sales to come in on the higher end of very low expectations.  The International Council of Shopping Center’s Chief Economist Michael P. Niemira expects retailers to post a -3.5% to -4.0% declines for August which is better than the -5% this Summer. 

 

Weather Trends International Top 10 Positives for Retailers in August

 

1)  Warmer August than last year, especially the Northeast which had hottest conditions in 3-years after coldest start to Summer in over 140 years.  Warmer Temperatures show a 78% correlation to stronger August retail sales gains.  

national-aug-2009-summary-chart

 

us-regional-summary-aug-2009

 

2)  Drier conditions in 5 of 8 U.S. regions.  Drier conditions show a 74% correlation to stronger August retail sales gains. 

 3)  Consumer Confidence up to 54.1, highest in almost a year but still well below an index of 90 which indicates average economic health and 100 which indicates strong economic growth.  The consumer confidence index shows a 30% correlation to higher retail sales gains.   

4)  Stock Market up almost 50% since March, 11-month high in August. 

5)  Gasoline prices down 29% vs a year ago levels; $2.60 gallon regular gas vs $3.69 according to AAA. 

 

 

6)  New home sales results announced in August show fastest pace in over 4 years, up +32.4%.

 

7)  The number of tornadoes are down 43% from August last year and 32% below average resulting in fewer disruptions or lost shopping days.

 

8)  Slowest start to the Atlantic hurricane season in 25 years by middle August with only one weak Tropical Storm Claudette impacting Northern Florida.  Last year there were three land falling systems including the evacuation of 2 million people in the Northern Gulf for Major Hurricane Gustav.  With two fewer land falling systems, retailers can post a 1.1% higher gain due fewer lost shopping days. 

9)  On the heels of the coldest July in 17 years for the nation as a whole, consumers saved 10% to 25% on home cooling bills giving them more discretionary spending in August.

10)  Easy comparisons to last year’s 3rd weakest sale results in 25 years with industry SSS of +1.7%.