Will cold snap chill the US economy?

Most of the U.S. is in the grip of a deep freeze. According to the National Weather Service, arctic cold air will impact eastern states through the first week of January, and a reinforcing shot of bitter, Canadian air is expected to arrive late this week. The recent cold snap has already set dozens of record lows, and more are likely.

Extreme weather events have always impacted the economy, and cold weather is no different. According to Planalytics, the U.S. economy took a roughly $5 billion hit from the polar vortex of 2013-2014 from lost productivity and a drop in consumer spending. But, according to the Chicago Federal Reserve, the usual winter of 2013-2014 had a significant, but short-lived, impact on economic activity, the effect was not large enough to fully account for the weak economy during that period.

When it comes to the current cold snap, so far, the economic impact is negligible. When questioned about its current impact on the economy, Mark Vitner, managing director and senior economist at Wells Fargo Securities told FOX Business, “right now the impact is fairly minimal because we are coming off the holiday season and few areas have been shut down due to snow or ice.”

Vitner added that the cold temperatures are certainly driving up power usage, which has folks at utilities “smiling,” while natural gas and coal prices have also gotten a little bit of a boost.

Back during the cold snap of 2013-2014, in a research note, Goldman Sachs (NYSE:GS) said: “Colder-than-normal weather tends to be a drag on economic activity, in particular in weather-sensitive areas such as construction.” While cold weather can negatively impact economic activity, it can help sales of winter apparel and boost utilities’ output.

FOX Business reached out to winter apparel companies to see if they have noticed any increase in buying interest in concert with recent cold snap, but they had not returned request for comment by the time this article was published.

Another business that can see some upside from cold weather is commodities trading. Commodities traders benefited from the major cold snap of 2013-2014, with Citigroup’s (NYSE:C) revenue from commodities transactions nearly doubling in the first quarter of 2014 year-over-year. The bank brought in $224 million in principal transactions revenue in “commodity and other contracts,” up almost 90% from the first quarter of 2013. As reported by Reuters, “the gains came as the Polar Vortex briefly upended the U.S. natural gas market, with physical prices at the primary New York trading hub spiking more than 20-fold in one day during January [2014].”

Other major banks including Goldman Sachs, Morgan Stanley (NYSE:MS) and Macquarie Bank reported solid returns from energy trading arms in the first quarter of 2014, added Reuters.