Polar vortex hasn't chilled Minnesota's economy

A good winter for dog day care
Wendy Harter, owner of Dog Days, Inc., a dog day care with three locations in St. Paul, says as hard as the winter has been, it's good for business.
Trisha Volpe / MPR News

The harshest winter in 35 years has stretched the plowing and salting budgets of cities across Minnesota. Heating bills have been astronomical. Drivers have been stuck in traffic — and paying more for repairs after accidents and run-ins with giant potholes.

Economists say the nasty winter isn't having much of an effect on Minnesota's overall economy. That's because every day in Minnesota, the state's 2.8 million working people generate $800 million in economic activity, according to Toby Madden, an economist for the Federal Reserve Bank of Minneapolis.

But the stiff punch of freezing weather has posed an economic hardship for some business owners. Among them is Janet Leeper, a hair salon owner who has just about had it with winter.

Like many small business owners, she'll tell you there's a direct correlation between the temperature, and the amount of cash in her till.

"When it's this bad out and storm after storm it just makes people call and cancel and then it feels like you can blow a cannon through here," said Leeper, who owns the Studio 2720 hair salon in Plymouth, Minn.

"Then when it warms up and the roads are decent again, then all of a sudden it's everybody calling at the same time and wanting to get in," she said. "It's dealing with the lack of business and then everybody flooding in all at once and wanting in at the same time depending on the weather."

Yet some people are making extra cash this winter — and not just plow drivers and body shops.

A half hour's drive away in St. Paul — or more than an hour when the road conditions are poor — another small business owner is much happier about the worst winter in a generation.

On most days, about a dozen dogs run around and play fetch indoors at Dog Days — a canine day care center near downtown St. Paul. Owner Wendy Harter said when the weather is as bad as it has been in recent weeks, the dog park — or even a short walk — often isn't an option for many people and their pets. As a result, she said, business is up 20 percent this year.

"It has been just bursting at the seams. It has been busier than ever at all three of my locations," Harter said. "Everyone who comes in says, 'Thank goodness for Dog Days. I don't know what my poor dog would do. He's bouncing off the walls without coming here and playing.' So it's been great."

This winter has been a boom for Harter. But it's been a bust for many commuters.

A car stopped in traffic gets zero miles per gallon, so many drivers are buying more fuel to travel the same distance.

They include Mark Smail of Maple Grove, whose daily commute to his job at a business analytics firm in downtown Minneapolis normally takes about 30 minutes. But this winter, the drive has been anything but normal.

"Last Monday was really bad," Smail said. "It took me almost two hours to get in."

Besides the loss in productivity at the office, Smail said his dead time comes with other costs some wouldn't directly associate with winter. His wife also works full time, and neither of them feels like cooking dinner at 7 p.m. So this winter, they've ordered a lot of take-out.

Their expenses go up whenever there's a snow day and their children are home from school.

"We've paid a lot more for babysitters, especially during the day, scrambling at the last minute," Smail said. "You pay a premium at that time of crisis, when you absolutely need them."

Shelling out more money for gas, babysitting and restaurant meals puts a dent in Smail's bank balance, but benefits the babysitters and businesses he pays.

That's why the winter, even one this bad is not likely to upset Minnesota's economic equilibrium, said Madden, the Federal Reserve economist.

While consumer spending has shifted to fuel for heating and transportation, road salt, and daycare and pet care, Madden said the polar vortex has not chilled Minnesota's overall economy.

"There's all this give and take going on at the micro level," he said. "But at the macro level, we still should be producing $300 billion worth of goods and services this year in 2014."

What about all the expensive repairs to burst pipes and busted fenders? Economists call that a "loss of wealth."

Despite those costs, Minnesota's economy is so big and so diverse that a few months of lousy weather is not likely to move the needle much. In fact, Madden said, all signs point to continued economic growth.

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